EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1134798
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.
CMI Forge applied for a TCO in respect of certain bars or rods on 17 October 2011.
Instrument
TCO No 1134798 was made on 09 January 2012. It declares that those certain bars or rods 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. 1134798 is taken to have come into force on 17 October 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 Customs Act 1901 was enacted by the Parliament of Australia to regulate the importation and exportation of goods, including the imposition of customs duties. One of the mechanisms introduced under this Act is the scheme for Tariff Concession Orders (TCOs), which allows for the application of lower rates of customs duty on certain goods. The problem or gap this scheme addresses is the need to provide tariff relief for goods that are not produced domestically or for which a suitable domestic substitute is not available. The Tariff Concession Instrument No. 1134798, made on 9 January 2012, is an example of such a concession, applying to certain bars or rods where no substitutable goods are produced in Australia, thereby reducing the duty rate from the general 5% to free. The policy objective of this particular TCO is to facilitate the importation of these goods without imposing a tariff burden, thus potentially lowering costs for importers and benefiting the broader market.
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 legislative provision enables the application of a reduced rate of customs duty to specified goods. A person can apply for a TCO if the goods in question are not listed in section 269SJ of the Act, which identifies goods ineligible for a TCO. The CEO must then determine if the application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia at the time of the application. If the application meets these criteria, the CEO is mandated to issue a TCO. Instrument No. 1134798, for example, was issued on 9 January 2012, following an application by CMI Forge for certain bars or rods, resulting in these goods being exempt from the general duty rate of 5%, thus attracting a duty rate of free. The Act ensures that the rights of importers are advantageously impacted by such concessions, allowing them to apply for duty refunds on imports since the effective date of the TCO, while not imposing any liabilities on other parties.
Key Provisions
The Tariff Concession Instrument No. 1134798, pursuant to the Customs Act 1901, establishes a tariff concession order (TCO) for certain bars or rods, effectively reducing the duty on these goods from 5% to free (Sections 269C, 269F, 269P(3)). This instrument applies to goods that meet the core criteria, which include that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged (Section 269C). The instrument came into effect on 17 October 2011, the date the application was made (Subsection 269S(1)). The application was approved after it was determined that there were no substitutable goods produced in Australia, and no submissions were received in opposition to the TCO (Subsection 269K(1)).
The Customs Act 1901 imposes several obligations on the Chief Executive Officer of Customs (CEO) when processing a TCO application. Firstly, the CEO must ensure that the application does not pertain to goods specified in Section 269SJ of the Act, which cannot be subject to a TCO. Secondly, the CEO is required to assess whether the application meets the core criteria specified in Section 269C. This involves confirming that no substitutable goods were produced in Australia in the ordinary course of business on the date of application. If the application meets these criteria, the CEO must make a written order, declaring the goods subject to the TCO (Section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed (Subsection 269K(1)). The CEO's role is to ensure the transparent and fair application of the TCO process.
Failure to comply with the requirements of the Customs Act 1901 or the terms of the TCO may result in various consequences. While the explanatory statement does not detail specific offences or penalties related to TCOs, breaches of the Customs Act can generally lead to civil or criminal penalties. For example, Section 276 of the Act outlines various offences, including the smuggling of goods, which can incur significant fines and imprisonment. The maximum penalties for such offences can vary, but they often include fines up to $220,000 for individuals and $1,100,000 for bodies corporate, along with potential imprisonment terms. The Act also provides for the recovery of unpaid duties and interest, which can add to the financial burden for non-compliance.