EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135929
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.
Reliance Worldwide applied for a TCO in respect of certain mounting tools on 27 October 2011.
Instrument
TCO No 1135929 was made on 23 January 2012. It declares that those certain mounting tools 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. 1135929 is taken to have come into force on 27 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 Australian Parliament, was introduced to facilitate and regulate the administration of customs duties and other taxes on goods entering and leaving the country. The Customs Act provides the framework for the establishment of a tariff concession scheme, allowing for the application of reduced or waived customs duties on certain goods under specific conditions. This scheme is designed to address economic and trade policy objectives by potentially lowering costs for businesses importing specific goods and promoting fair competition. Tariff Concession Orders (TCOs) are a key feature of this scheme, allowing the Chief Executive Officer of Customs to reduce or eliminate customs duties on particular goods if certain criteria are met, such as the absence of substitutable goods produced in Australia. The Explanatory Statement for Tariff Concession Instrument No. 1135929, issued on 23 January 2012, illustrates the process and policy considerations involved in granting such concessions, as demonstrated in the case of certain mounting tools, where the duty rate was reduced from 5% to free, following a successful application by Reliance Worldwide.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a mechanism for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to specific goods. This concession applies to goods specified in a TCO, which are determined by an application process where a person can apply to the CEO for such an order if the goods are not those specified in section 269SJ of the Act. The CEO must ensure that the application does not pertain to goods that are excluded by the Act and must verify that the application meets the core criteria, which include the absence of substitutable goods produced in Australia at the time the application is lodged. The Tariff Concession Instrument No. 1135929, made under this Act, illustrates the process and outcome of such an application, in this case, for certain mounting tools, where the CEO determined that no substitutable goods were produced in Australia, thereby allowing for a tariff concession. This instrument highlights the legislative intent to facilitate trade by reducing duties on specific imported goods, provided they meet the statutory criteria. The Act’s application is national in scope, impacting importers and potentially benefiting them by allowing duty refunds for imports since the effective date of the TCO, which aligns with the date of the application.
Key Provisions
The primary sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include sections 269F (269F), 269C (269C), and 269SJ (269SJ). Section 269F permits an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods, while section 269C specifies that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269SJ, on the other hand, outlines the types of goods that are ineligible for a TCO. If the CEO is satisfied that the application meets the core criteria and does not pertain to ineligible goods, they must make a TCO (269P(3)).
The Act imposes several obligations and requirements on parties and entities governed by it. Firstly, any person seeking a TCO must ensure their application is lodged in accordance with the provisions of section 269F (269F). They must also ensure that the goods in question do not fall under the ineligible category specified in section 269SJ (269SJ). The CEO has a responsibility to evaluate each application against the core criteria outlined in section 269C (269C) and to make a TCO if the criteria are met. Additionally, upon receiving a valid application, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (269K(1)).
Failure to comply with the requirements of the Customs Act 1901 or any associated regulations can result in various consequences. While specific offences and penalties are not detailed in the explanatory statement, breaches of customs legislation can typically lead to civil or criminal penalties, depending on the severity and intent of the breach. For instance, knowingly making false statements or providing misleading information in an application could result in criminal charges, while failing to comply with tariff regulations might lead to fines or other financial penalties. The exact penalties would be determined by the relevant courts and would depend on the specific circumstances of the breach.