EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140438
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.
Clamp a Sign applied for a TCO in respect of certain frames on 05 December 2011.
Instrument
TCO No 1140438 was made on 13 February 2012. It declares that those certain frames 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. 1140438 is taken to have come into force on 05 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, addresses the issue of establishing a framework for tariff concessions on specific goods. This Act facilitates the application process for Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can apply reduced customs duties on certain goods. The explanatory statement reveals that the Tariff Concession Instrument No. 1140438, introduced on 13 February 2012, was made to address an application by Clamp a Sign for a TCO on certain frames, resulting in a duty reduction from 5% to free. The policy objective underpinning this instrument is to provide tariff relief for goods that do not have substitutable Australian-made equivalents, thereby encouraging the importation of these specific goods without incurring duty charges. This mechanism is designed to benefit importers by potentially allowing them to claim refunds for duties paid on these goods since the effective date of the TCO, which is the date the application was lodged, in this case, 5 December 2011.
Scope and Application
The Tariff Concession Instrument No. 1140438, made under the Customs Act 1901, applies to individuals or entities seeking a tariff concession order (TCO) for specific goods. The Act allows for the application of lower rates of customs duty on goods that are the subject of a TCO, provided certain criteria are met. Specifically, the instrument applies to the import of certain frames that are not currently being produced in Australia and for which there is no substitutable domestic product. The scope of this Act extends to any person or entity wishing to import these frames and benefit from the concessional tariff rate. The geographic reach of the Act is national, as it pertains to customs duties imposed by the Commonwealth of Australia. The Act does not specify exclusions or exemptions beyond those already detailed in the Customs Act 1901, such as goods that cannot be subject to a TCO. The application of this Act may be further detailed or refined through subordinate instruments, but the primary legislation dictates the fundamental principles and requirements for a TCO.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1140438 are sections 269C, 269F, and 269P(3) of 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. If the CEO determines that the application meets the core criteria under section 269C, which includes the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must then issue a written TCO under section 269P(3). The TCO declares that the goods subject to the application are subject to a prescribed tariff item in Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved. The applicant must ensure that their application meets the core criteria, particularly that no substitutable goods were produced in Australia on the date of application. The CEO, upon receiving a valid application, must decide whether it meets these criteria and, if so, issue a TCO. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO if they believe it should not be made. This notice and objection period is a procedural safeguard to ensure that all relevant considerations are taken into account before the TCO is issued.
Any breaches of the provisions under the Customs Act 1901 can result in both civil and criminal penalties. While the specific offences and penalties for breaching the Customs Act are not detailed in the Explanatory Statement, generally, the Act provides for a range of sanctions including fines and imprisonment for offences involving fraudulent or negligent conduct in relation to customs duties and other import/export regulations. For example, section 236 of the Customs Act 1901 provides for penalties for making false statements or using false documents, which can result in substantial fines and imprisonment.
Furthermore, the Act includes provisions for the recovery of overpaid duties and the imposition of interest on underpaid duties. For instance, section 126 of the Customs Regulations 1993 allows importers to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force. This ensures that importers who have already paid duties on goods that later qualify for tariff concessions can seek reimbursement, thereby avoiding undue financial burdens.
In summary, Tariff Concession Instrument No. 1140438 facilitates the reduction or exemption of customs duties on certain frames by declaring them as goods to which a specified tariff item applies. It outlines the process for applying for and issuing a TCO, the procedural obligations for the CEO, and the potential financial consequences for both applicants and the Commonwealth, including the possibility of duty refunds for importers.