EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139323
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.
Australian Brushware Corporation Pty Ltd applied for a TCO in respect of certain brushes on 25 November 2011.
Instrument
TCO No 1139323 was made on 13 February 2012. It declares that those certain brushes 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. 1139323 is taken to have come into force on 25 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 Australian Parliament, establishes a framework for the regulation of customs duties, including provisions for Tariff Concession Orders (TCOs). The Act aims to facilitate trade by potentially reducing customs duties on certain imported goods under specific conditions. The problem or gap addressed by the Act is to ensure that Australia’s customs regime remains competitive and supportive of industry by allowing for reduced duty rates on goods where appropriate, thus promoting economic efficiency and encouraging the importation of goods not produced domestically. The Tariff Concession Instrument No. 1139323, made in 2012, exemplifies this process, where the Chief Executive Officer of Customs granted a concession on certain brushes, setting their duty rate at free, provided no substitutable goods were produced in Australia. The policy objective is to enhance trade efficiency by lowering the duty on goods that are not locally produced, thereby benefiting importers and potentially lowering costs for consumers.
Scope and Application
The Customs Act 1901 applies to all individuals, companies, and entities involved in the importation of goods into Australia, facilitating the regulation of customs duties and tariffs on such goods. Specifically, Tariff Concession Orders (TCOs) can be applied for and granted by the Chief Executive Officer of Customs under this Act, to provide a lower rate of customs duty on specified goods. The application process for a TCO involves the applicant meeting certain criteria, such as the absence of substitutable goods produced in Australia, before the CEO can decide to issue the concession order. This instrument extends its application across all goods subject to the Customs Act 1901, with the exception of those specified in section 269SJ which cannot be subject to a TCO. The application of a TCO is effective from the date the application is lodged, but it does not retroactively affect any rights or impose liabilities on any person in respect of actions taken prior to the registration date. Furthermore, subordinate instruments such as the Customs Tariff Act 1995 may extend or further detail the application of this legislation.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1139323 under the Customs Act 1901 (section 269F) provide that the Chief Executive Officer of Customs (CEO) must decide whether an application for a Tariff Concession Order (TCO) meets the core criteria. Specifically, the CEO must ensure that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written TCO, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in a lower or free rate of duty (section 269P(3)). In this case, the TCO No. 1139323 specifies that certain brushes are subject to item 50 of Schedule 4, with the rate of duty being free instead of the general 5%.
The Act imposes several obligations on the parties involved. The applicant, in this case Australian Brushware Corporation Pty Ltd, must ensure that their application for a TCO is valid and meets the core criteria as outlined in the Act. The CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons to oppose the TCO. The CEO must also review any submissions and make a decision based on the merits of the application. In this instance, the CEO did not receive any submissions in response to the notice. Once the CEO decides that the application meets the criteria, they must issue a written TCO.
Failure to comply with the requirements of the Customs Act 1901 can lead to various civil or criminal consequences. While the explanatory statement does not detail specific offences, breaches of the Act can generally result in penalties. These may include fines, imprisonment, or both, depending on the nature and severity of the breach. The maximum penalties for breaches of the Customs Act can vary widely, but they can include significant fines for corporate entities and potential imprisonment for individuals, depending on the specific provisions violated. Compliance with the Act is crucial to avoid these consequences.
In summary, Tariff Concession Instrument No. 1139323 outlines the process for granting tariff concessions on certain goods, ensuring that no substitutable goods are produced in Australia. The CEO must review applications, publish notices for submissions, and decide based on the core criteria. Failure to comply with the Act's requirements can result in severe penalties, highlighting the importance of adherence to the legislative framework.