EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135485
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.
HI Fraser group applied for a TCO in respect of certain vacuum toilets on 24 October 2011.
Instrument
TCO No 1135485 was made on 16 January 2012. It declares that those certain vacuum toilets 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. 1135485 is taken to have come into force on 24 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 to facilitate trade and collect customs duties, providing a structured framework for the regulation of imports and exports. The Customs Act 1901 was enacted by the Parliament of Australia and aims to streamline the customs process, ensure efficient revenue collection, and protect domestic industries by regulating the import and export of goods. A notable feature of this Act is the establishment of a scheme under which Tariff Concession Orders (TCOs) may be made, allowing for reduced customs duties on certain goods under specific conditions. This legislative instrument, Tariff Concession Instrument No. 1135485, was introduced to address a gap in the tariff structure by providing tariff concessions on vacuum toilets, ensuring that importers are not unfairly burdened by high customs duties on goods that are not produced domestically. The policy objective is to encourage the import of goods that are not produced in Australia, thereby promoting competition and potentially lowering consumer prices.
Scope and Application
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply lower rates of customs duty to specific goods, provided certain criteria are met. The Act applies to any person who can apply for a TCO for goods that are not specified in section 269SJ as ineligible for such concessions. For an application to be valid, it must meet core criteria including the absence of substitutable goods being produced in Australia at the time of the application. This means that the goods for which the concession is sought must not have an Australian-made equivalent that can serve the same purpose. The application process involves a public notice in the Gazette, inviting objections which, in the case of TCO No. 1135485, were not forthcoming. The TCO itself does not affect pre-existing rights or liabilities but benefits importers by potentially allowing them to claim refunds on duties paid on the specified goods since the TCO's effective date. The TCO's reach is national, governed by Commonwealth legislation, but its effects are specific to the goods and duties outlined in the particular TCO.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) under consideration are sections 269C, 269F, 269P(3), and 269SJ. Section 269F allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) regarding goods, while section 269C sets out the core criteria that the application must meet. This includes the absence of substitutable goods produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). If these criteria are satisfied, the CEO must make a written order declaring that the goods in question are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)). Section 269SJ specifies certain goods that cannot be subject to a TCO.
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily directed towards the CEO of Customs. The CEO must ensure that any TCO application is assessed against the core criteria specified in section 269C. If the application meets these criteria and is not in respect of goods specified in section 269SJ, the CEO must proceed to make a TCO. Furthermore, under subsection 269K(1), the CEO is obligated to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made. In this case, the CEO did not receive any submissions.
The Act outlines specific offences, penalties, and civil or criminal consequences for breaches. However, the explanatory statement does not specify maximum penalties for breaches of the Act or the Regulations. Nevertheless, it is clear that the Act 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 in respect of anything done or omitted to be done before the date of registration. This means that the rights of importers will be beneficially affected, and the TCO does not impose any liabilities on any person. 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.