EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131850
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Hammelmann applied for a TCO in respect of certain foot actuated valves on 19 September 2011.
Instrument
TCO No 1131850 was made on 13 December 2011. It declares that those certain foot actuated valves are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 1131850 is taken to have come into force on 19 September 2011.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Instrument No. 1131850, enacted under the Customs Act 1901, addresses the issue of applying tariff concessions to specific goods not produced in Australia, thus facilitating more affordable imports. This instrument was introduced to streamline the process whereby the Chief Executive Officer of Customs can make Tariff Concession Orders, thereby granting lower customs duty rates for particular imported goods. This initiative was undertaken by the Australian Parliament with the aim of ensuring that the importation of goods that are not locally produced does not incur prohibitive duties, thereby fostering fair trade practices and economic efficiency. The process requires an application to be made to the CEO, who must then determine whether the application meets the core criteria outlined in the Act, specifically ensuring that no substitutable goods are produced in Australia.
The explanatory statement outlines that Hammelmann applied for a tariff concession on certain foot actuated valves, and upon meeting the criteria, the CEO issued Tariff Concession Order No. 1131850, effectively granting a zero percent duty rate for these goods, down from the general rate of 5%. The order was published in the Gazette, inviting any objections, though none were received. The order came into force on the date of application, 19 September 2011, and does not retroactively disadvantage any person, thus protecting the rights of importers who can apply for duty refunds on imports made since the commencement date. This legislative action aims to support importers by reducing the financial burden of customs duties on specific goods.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to individuals or entities seeking to import goods into Australia, specifically targeting those who may benefit from reduced customs duties. A TCO can be applied for by any person in respect of goods, provided the application does not pertain to goods specified in section 269SJ of the Act, which lists those ineligible for tariff concessions. If an application is deemed to meet the core criteria, primarily that no substitutable goods are produced in Australia, the CEO is mandated to issue a TCO, effectively lowering the duty rate for the specified goods. The geographic reach of this Act is national, impacting importers across Australia. The Act does not specify exclusions beyond those in section 269SJ, and its application can be extended or modified through subordinate instruments such as regulations or subsidiary legislation. The application process includes public consultation as outlined in section 269K, although no submissions were received in this instance. The commencement of a TCO aligns with the date of application lodging, ensuring that the rights of existing importers are protected against any disadvantage or new liabilities imposed by the concession.
Key Provisions
The primary operative sections of this legislation revolve around the creation and implementation of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F), the conditions that must be met for such orders to be granted (section 269C), and the definitions of key terms like 'substitutable goods' (section 269D), 'ordinary course of business' (section 269E), and 'goods produced in Australia' (section 269D). The Customs Act 1901 (section 269P) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, they must make a written order (a TCO) specifying the applicable customs duty rate. The explanatory statement clarifies that the CEO must ensure that no substitutable goods are produced in Australia when considering a TCO application.
In terms of obligations, the CEO is required to assess the validity of a TCO application, considering whether it meets the core criteria as outlined in section 269C. This involves determining if the goods in question are substitutable by any goods produced in Australia. Additionally, as per section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit their views on whether the TCO should be made. The CEO's duty includes reviewing any submissions received and making a decision based on the merits of the application and any valid submissions received. The CEO must also ensure that the TCO does not adversely affect the rights of any person, except the Commonwealth, in respect of actions taken before the TCO was registered.
The Customs Act 1901 and associated regulations do not explicitly detail offences, penalties, or specific consequences for breaches of the TCO provisions. However, the Act generally provides for civil and criminal penalties for breaches of customs regulations. For instance, section 126A of the Customs Act 1901 outlines penalties for fraudulent misrepresentation or concealment of information, which could include fines of up to 10,000 penalty units or imprisonment for up to 10 years, or both. Section 126B provides for penalties for breaches of the Customs Act 1901 or regulations, which could include fines of up to 10,000 penalty units or imprisonment for up to 5 years, or both, for individuals, and up to 50,000 penalty units for bodies corporate. These penalties underscore the importance of compliance with customs regulations and the potential legal consequences of non-compliance.