EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135848
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.
Eylex Pty Ltd applied for a TCO in respect of certain interface motor vehicle junction boxes on 25 October 2011.
Instrument
TCO No 1135848 was made on 16 January 2012. It declares that those certain interface motor vehicle junction boxes 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. 1135848 is taken to have come into force on 25 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, enacted by the Parliament of Australia, establishes a framework for the administration of customs and excise duties, including the creation of Tariff Concession Orders (TCOs) to provide tariff concessions for certain goods. The primary objective of the Act is to regulate the importation of goods into Australia while facilitating trade by providing tariff relief where appropriate. TCOs are a means by which the Chief Executive Officer of Customs can grant tariff concessions on specific goods, thereby reducing the customs duty payable on those goods if certain criteria are met. This legislative mechanism was introduced to address the need for tariff relief in cases where the goods in question are not produced domestically, thereby promoting competition and consumer choice without disadvantaging domestic producers. In the case of Eylex Pty Ltd's application for a TCO concerning certain interface motor vehicle junction boxes, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 1135848, which effectively reduced the duty on these goods from 5% to free.
Scope and Application
The Customs Act 1901, under 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 that seek to have a lower rate of customs duty applied to specific goods through the application process outlined in section 269F. The legislation sets out core criteria for the approval of TCO applications, such as the absence of substitutable goods produced in Australia, as defined in sections 269C and 269D of the Act. A TCO, once approved and declared by the CEO, alters the tariff classification of the goods specified in the order, thereby affecting the duty rates applicable to those goods. The geographical reach of this Act is national, extending across all jurisdictions within Australia, as it pertains to the regulation of customs duties. Notably, the Act excludes certain goods from being subject to a TCO as per section 269SJ, and any TCO made under this Act does not retroactively disadvantage any person or impose liabilities for actions taken prior to the TCO's effective date. Additionally, the Act allows for the application to be subject to public consultation, although in the case of TCO No. 1135848, no objections were received.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P, which together establish the process for applying for and granting Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods. If the CEO determines that the application meets the core criteria outlined in section 269C, and that the goods are not specified in section 269SJ, they are required to make a TCO under section 269P. This order declares that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively granting a lower rate of customs duty on these goods.
The Act imposes several obligations on the parties involved in the TCO process. The CEO must ensure that any application for a TCO is assessed against the criteria set out in section 269C. This includes verifying that no substitutable goods are produced in Australia at the time the application is lodged. Additionally, the CEO must publish a notice in the Gazette once an application is accepted as valid, inviting any person who believes the TCO should not be made to lodge a submission. The Act also requires that the TCO not affect the rights of a person, other than the Commonwealth, in a way that would disadvantage them or impose liabilities for actions taken before the TCO is registered.
Breaching the requirements of the Customs Act 1901 can lead to various civil and criminal consequences. While the specific offences and penalties are not detailed in the explanatory statement, it is known that the Act provides for a range of penalties for non-compliance with its provisions. These penalties can include fines and, in more severe cases, imprisonment. For example, under section 238 of the Act, knowingly making a false statement or providing false information in connection with an application for a TCO can result in significant fines and imprisonment. It is essential for all parties involved to comply strictly with the provisions of the Act to avoid these potential consequences.
In summary, the Customs Act 1901, as amended by this Tariff Concession Instrument, provides a structured process for granting tariff concessions on certain goods. The Act imposes specific obligations on the CEO of Customs to assess applications and ensure they meet the criteria for a TCO. It also ensures that the rights of non-Commonwealth persons are protected and that no liabilities are imposed retroactively. Breaching the Act's provisions can lead to severe civil and criminal penalties, underscoring the importance of strict compliance.