EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140224
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.
Minitube Australia applied for a TCO in respect of certain tubes on 02 December 2011.
Instrument
TCO No 1140224 was made on 13 February 2012. It declares that those certain tubes 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. 1140224 is taken to have come into force on 02 December 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 within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislation aims to address the gap in providing lower rates of customs duty for specific goods, thereby facilitating trade and economic efficiency. Specifically, section 269F of the Act allows for applications to the CEO for TCOs, provided the goods in question do not fall under the prohibited categories outlined in section 269SJ. The policy objective is to ensure that customs duty concessions are granted only when there are no substitutable goods produced in Australia, as per the criteria in section 269C. This was evident in the case of Minitube Australia, which successfully applied for a TCO on certain tubes, resulting in a duty rate of free, effective from the date of application under subsection 269S(1). No submissions were received against the TCO application, indicating broad acceptance of the concession.
Scope and Application
The Tariff Concession Instrument No. 1140224 under the Customs Act 1901 applies to the goods specified in the instrument, namely certain tubes, and the process through which the Chief Executive Officer of Customs (the CEO) determines and implements tariff concessions for these goods. The instrument is targeted at the entities that produce or import these goods, specifically granting them tariff concessions as long as no substitutable goods are produced in Australia at the time of the application. The instrument operates within the national jurisdiction of Australia, as it pertains to the Customs Act, which is a Commonwealth Act. The application and approval process for tariff concession orders is governed by specific criteria set out in the Customs Act, including the absence of substitutable goods produced in Australia in the ordinary course of business. While the instrument itself is specific to the certain tubes in question, the broader legislative framework allows for the creation of additional tariff concession orders under similar conditions, thereby extending its application to other goods and entities subject to the same criteria.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes the framework for Tariff Concession Orders (TCOs) as outlined in sections 269C, 269F, and 269SJ. A TCO is a mechanism through which a lower rate of customs duty can be applied to certain goods, provided an application is made and approved by the Chief Executive Officer of Customs (CEO). An application for a TCO can be submitted by any person, but it cannot be in respect of goods specified in section 269SJ, which lists items that are ineligible for TCOs. The CEO must assess whether the application meets the core criteria, notably whether no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged (section 269C).
In the case of Minitube Australia's application for a TCO regarding certain tubes, the CEO determined that the goods qualified for a concession, as no substitutable goods were being produced in Australia. Consequently, a TCO was issued on 13 February 2012, which declared that these specific tubes would be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, thereby reducing the duty rate from 5% to free. This TCO came into effect on 2 December 2011, the date the application was lodged (subsection 269S(1)).
The Act imposes certain obligations on the CEO, including the requirement to publish a notice in the Gazette inviting submissions from any interested parties who might oppose the granting of a TCO (subsection 269K(1)). In Minitube Australia's case, no such submissions were received, facilitating the CEO's decision. Additionally, the Act ensures that the implementation of a TCO does not retroactively disadvantage any person or impose new liabilities on them, except for the Commonwealth. For importers, this means they can apply for a refund of duties paid on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Failure to comply with the provisions of the Customs Act 1901 or misuse of TCOs can lead to various consequences. Offences under the Act can result in both civil and criminal penalties. For instance, knowingly making a false statement in an application for a TCO could be considered an offence under section 226 of the Act, potentially leading to a penalty of up to 10,000 penalty units or imprisonment for five years, or both, under section 282. Additionally, any person who knowingly contravenes the Act or aids or abets such a contravention may face fines and imprisonment as stipulated in the relevant sections of the Act.