EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1132782
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.
IMCD Australia applied for a TCO in respect of certain solutions on 23 September 2011.
Instrument
TCO No 1132782 was made on 19 December 2011. It declares that those certain solutions 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. 1132782 is taken to have come into force on 23 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. 1132782 was enacted under the Customs Act 1901 to provide a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on certain imported goods, thereby reducing or eliminating customs duty for those goods. This legislation addresses the need for flexibility in tariff application to encourage the import of goods that are not produced domestically, thereby supporting trade and economic growth. The instrument was introduced in response to an application by IMCD Australia for a tariff concession on specific solutions, and the instrument was effective from the date the application was lodged, 23 September 2011. The policy objective, as outlined in the Act, is to ensure that tariff concessions are granted where appropriate, fostering a competitive environment for imported goods that have no local substitutes.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the application and issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). A TCO can be applied for by a person in respect of goods, provided they are not specified in section 269SJ of the Act, which lists goods that are ineligible for tariff concessions. For an application to meet the core criteria, it must be established that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, as defined by sections 269C, 269D, and 269E of the Act. If the CEO determines that the application meets these criteria, they are required to issue a written TCO, specifying the reduced duty rate for the goods in question. This instrument applies across the Commonwealth of Australia and does not disadvantage existing rights or impose new liabilities on anyone except the Commonwealth. The TCO does not impact rights as they existed prior to its registration but allows for beneficial impacts on importers, such as the potential for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1132782 (TCO No. 1132782) under the Customs Act 1901 (section 269F) provide for the application process for Tariff Concession Orders (TCOs) and the criteria that must be met for such an order to be granted. Specifically, section 269C states that the application must meet the core criteria, which include the absence of substitutable goods produced in Australia on the date the application was lodged (section 269P(3)). Once these criteria are satisfied, the Chief Executive Officer of Customs (CEO) must make a written order (section 269P(3)) declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, thereby applying a lower or free rate of duty (section 269P(3)).
The Act imposes several obligations on the parties involved. For instance, section 269K(1) requires the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to submit their reasons. This ensures transparency and allows for public input before the TCO is finalised. Furthermore, section 269S(1) stipulates that a TCO is deemed to come into force on the day the application is lodged, in this case, 23 September 2011. This means that the concessions apply retroactively from the date of the application, ensuring that no rights of the Commonwealth or third parties are adversely affected by the TCO.
In terms of consequences, section 269SJ of the Act specifies certain goods that cannot be the subject of a TCO, ensuring that the concessions do not apply to goods that are inappropriate or restricted. Additionally, section 269K(1) requires the CEO to consider any submissions received in response to the Gazette notice before making a final decision on the TCO. The explanatory statement notes that no submissions were received in this case, indicating a smooth process without any objections. If any party were to breach the requirements set out by the Act, they may face civil or criminal penalties depending on the nature and severity of the breach, although the exact penalties are not specified in the explanatory statement.
Overall, Tariff Concession Instrument No. 1132782 streamlines the process for obtaining tariff concessions, ensuring that eligible goods receive the appropriate duty rates while maintaining transparency and public participation in the decision-making process.