EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138952
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.
VIP Steel Packaging applied for a TCO in respect of certain ovens on 22 November 2011.
Instrument
TCO No 1138952 was made on 13 February 2012. It declares that those certain ovens 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. 1138952 is taken to have come into force on 22 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 imports and exports, including the imposition of customs duties. To facilitate trade and economic growth, the Act incorporates a scheme under which the Chief Executive Officer of Customs may grant Tariff Concession Orders (TCOs), effectively reducing or eliminating customs duties on certain goods. This scheme aims to support Australian industries by ensuring that imported goods do not compete unfairly with domestically produced alternatives. VIP Steel Packaging applied for a TCO for certain ovens, which was granted on 13 February 2012, effective from 22 November 2011, when the application was lodged. The granting of this concession was based on the absence of substitutable goods produced in Australia, as required by the Act. This TCO allows for the importation of the specified ovens at a duty rate of free, rather than the general rate of 5%, benefiting importers by potentially allowing them to claim refunds on duties paid before the TCO's effective date.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods specified by an applicant and are designed to lower the customs duty on those goods, provided they meet the core criteria stipulated under the Act. Specifically, an application for a TCO will be considered if it pertains to goods that are not listed in section 269SJ of the Act, which includes items that are not eligible for tariff concessions. For a TCO to be issued, it must be established that no substitutable goods are produced in Australia at the time the application is lodged. This assessment hinges on definitions provided in sections 269C, 269D, and 269E of the Act, which outline what constitutes 'substitutable goods' and 'goods produced in Australia'. Once the CEO determines that an application meets the core criteria, they are mandated to issue a TCO, as per section 269P(3) of the Act. This order declares that the specified goods are subject to a particular item of Schedule 4 of the Customs Tariff Act 1995, thereby applying a reduced duty rate. The TCO mechanism ensures that the rights of entities other than the Commonwealth are not adversely affected and does not impose new liabilities on these entities.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1138952 are sections 269C, 269F, 269P, and 269S, among others, within the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods, provided these goods are not specified in section 269SJ. Section 269C states that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, section 269P(3) mandates the CEO to make a written TCO order, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes certain obligations and requirements on parties involved with the TCO process. The CEO of Customs is required to determine if the TCO application meets the core criteria as outlined in section 269C. The CEO must also publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to lodge submissions against the making of the TCO. Additionally, section 269S(1) stipulates that a TCO is to be considered effective from the date the application for the TCO was lodged. Furthermore, section 126(1)(r) of the Regulations allows importers to apply for a refund of duty on goods imported since the TCO's effective date.
The Act provides for potential offences, penalties, or civil/criminal consequences for breaches of its provisions. However, the explanatory statement does not detail specific offences or penalties related to the making or breach of a TCO. It is important to refer to the broader Customs Act 1901 and associated regulations for a comprehensive understanding of penalties, which may include fines or other sanctions for non-compliance with customs regulations. The TCO itself does not impose liabilities on any person, as clarified under the Act.
In summary, Tariff Concession Instrument No. 1138952, under the Customs Act 1901, outlines the process for applying for and making TCOs, ensuring that importers can benefit from reduced duty rates on specified goods. The obligations revolve around the CEO's assessment and publication requirements, while the rights of importers are protected by allowing duty refunds for imports since the TCO's effective date. Although the explanatory statement does not detail specific penalties for breaches, the broader legislative framework provides for enforcement mechanisms to ensure compliance.