EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138723
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.
Laminex Group Pty Ltd applied for a TCO in respect of certain storage and retrieval systems on 21 November 2011.
Instrument
TCO No 1138723 was made on 13 February 2012. It declares that those certain storage and retrieval systems 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. 1138723 is taken to have come into force on 21 November 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 Commonwealth Parliament, provides a framework for the regulation of customs duties and related matters. One aspect of this framework is the ability to grant tariff concession orders (TCOs) to lower the customs duty on certain goods. The explanatory statement for Tariff Concession Order No. 1138723, enacted in 2012, details the process and considerations involved in making such an order. This particular order was introduced to address the issue of applying tariff concessions to specific goods, in this case, certain storage and retrieval systems, by the Chief Executive Officer of Customs. The objective is to ensure that these goods, which have no substitutable Australian-produced alternatives, benefit from reduced customs duty rates, thereby supporting their import and use in Australia. This order aims to provide relief to importers without disadvantaging existing parties or imposing new liabilities.
Scope and Application
The Tariff Concession Instrument No. 1138723, made under Part XVA of the Customs Act 1901, applies to entities and individuals seeking tariff concessions for specific goods, namely certain storage and retrieval systems, which are now subject to a lower rate of customs duty. This instrument is enacted to provide relief to the Laminex Group Pty Ltd, who applied for the concession on 21 November 2011. The application of this Act is confined to the Commonwealth jurisdiction, with no substitutable goods produced in Australia at the time of application. The scope of the Act extends to providing a tariff concession for goods specified in the application, effective from the date of lodgement, provided no objections are raised against the concession. The Act does not affect the rights of any person other than the Commonwealth as per the date of registration, and it imposes no new liabilities on any party. The instrument was made on 13 February 2012, declaring that the goods in question are subject to item 50 of Schedule 4 to the Tariff, with the general duty rate of 5% being reduced to free for the specified goods.
Key Provisions
The Customs Act 1901, particularly under Part XVA, outlines a mechanism for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) (s 269F). These orders apply lower rates of customs duty on specified goods, provided that certain conditions are met. A TCO application will be considered by the CEO if it pertains to goods that are not listed in section 269SJ, which includes goods that cannot be subject to a TCO. To meet the core criteria, the application must demonstrate that on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). Substitutable goods are defined as those that are produced in Australia and are capable of being used in a manner similar to the goods in question (s 269D, s 269E, s 269B).
Entities or individuals applying for a TCO must provide sufficient evidence to show that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is mandated to make a written order if satisfied that the application meets the core criteria (s 269P(3)). In the case of Laminex Group Pty Ltd's application for certain storage and retrieval systems, the CEO found that no substitutable goods were produced in Australia, resulting in the issuance of TCO No 1138723 (s 269K(1)). This order declared that these systems are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free, instead of the general rate of 5%.
The Act imposes certain obligations on the CEO, including the requirement to publish a notice in the Gazette inviting submissions from interested parties after accepting a valid TCO application (s 269K(1)). In the case of TCO No 1138723, no submissions were received. The TCO is deemed to have come into force on the date the application was lodged, which in this case was 21 November 2011 (s 269S(1)). Importantly, the TCO does not retroactively affect the rights of any person, except the Commonwealth, thereby ensuring that no person other than the Commonwealth incurs disadvantages or liabilities for actions taken before the TCO's effective date. Importers of the affected goods will benefit from being able to apply for a refund of duty from the date the TCO is considered effective.
Breaches of the provisions under the Customs Act 1901 can lead to various legal consequences. While the specific penalties for non-compliance with TCOs are not detailed in the explanatory statement, general penalties for breaches of the Customs Act can include fines and imprisonment. For instance, knowingly making a false statement or providing misleading information to obtain a TCO could result in significant penalties, reflecting the seriousness with which the Act treats such violations. The specific maximum penalties would be found in the relevant sections of the Customs Act or the Customs Regulations 1995, but they are not explicitly mentioned in this explanatory statement.