EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139124
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.
Home Theatre Group applied for a TCO in respect of certain coaxial cables on 23 November 2011.
Instrument
TCO No 1139124 was made on 16 February 2012. It declares that those certain coaxial cables 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. 1139124 is taken to have come into force on 23 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 Parliament of Australia, establishes a framework for the administration of customs duties and provides mechanisms for tariff concessions. Specifically, Part XVA of the Act allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce customs duties on certain goods, provided specific criteria are met. This legislative framework was introduced to address the need for a streamlined process to provide tariff relief on goods where no locally produced alternatives exist. The policy objective is to foster the import of goods that are not produced domestically, thereby benefiting consumers and potentially stimulating local industries by providing access to a wider range of products. The Tariff Concession Instrument No. 1139124, made on 16 February 2012, exemplifies this process, granting a tariff concession for certain coaxial cables, effectively reducing their customs duty rate from 5% to free.
Scope and Application
The Customs Act 1901, specifically under Part XVA, authorises the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods, subject to certain criteria being met. An application for a TCO can be made by any person, and if the application satisfies the core criteria stipulated in the Act, a TCO can be issued. This process is contingent on the absence of substitutable goods produced in Australia at the time the application is lodged. The geographic scope of this Act is national, as it applies across Australia under the Commonwealth jurisdiction. The Act does not apply to goods specified in section 269SJ, which outlines those goods that are ineligible for tariff concessions. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who might have reasons to oppose the TCO, although no such submissions were received in the case of TCO No 1139124. This TCO came into effect on the date the application was lodged, which was 23 November 2011, and it does not affect any pre-existing rights or liabilities of parties other than the Commonwealth.
Key Provisions
The key operative sections of this legislation include sections 269C, 269P, and 269S, which outline the criteria for making a Tariff Concession Order (TCO) under the Customs Act 1901 (section 269C), the process for making the order once the criteria are met (section 269P), and the effective date of the TCO (section 269S). Specifically, section 269C of the Act requires 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. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they must make a written order (a TCO) declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). The TCO is deemed to come into force on the day the application was lodged (section 269S(1)).
The obligations imposed by the Act on the parties involved, particularly the CEO, are significant. The CEO must first determine whether an application for a TCO is valid and not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the application is valid, the CEO must assess whether it meets the core criteria outlined in section 269C, specifically considering whether substitutable goods were produced in Australia on the application date. If the CEO is satisfied that the application meets the criteria, they must make a written TCO, as stipulated in section 269P(3). Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. This ensures transparency and allows for public input on the decision.
The legislation does not explicitly detail offences, penalties, or civil/criminal consequences for breach. However, the seriousness of complying with the criteria for a TCO and the procedural obligations on the CEO suggests that failure to adhere to the provisions of the Act could result in legal repercussions. For example, if the CEO incorrectly makes a TCO for goods that should not be eligible, this could lead to disputes and potential legal challenges from affected parties, particularly if such an error results in financial loss or legal disadvantage to any party. While specific penalties are not mentioned, any breach of the Act’s requirements could potentially lead to administrative or judicial review, and in severe cases, civil or criminal proceedings depending on the nature and impact of the breach.