EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140539
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.
Tindo Pty Ltd applied for a TCO in respect of certain film on 06 December 2011.
Instrument
TCO No 1140539 was made on 13 February 2012. It declares that those certain film 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. 1140539 is taken to have come into force on 06 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, provides a framework for the administration of customs duties and the regulation of imports and exports. Part XVA of this Act introduces a scheme for Tariff Concession Orders (TCOs), which are designed to offer relief from customs duty for certain goods under specific conditions. The problem this scheme addresses is the potential for increased costs and reduced competitiveness for imported goods that do not have Australian-made alternatives. The policy objective is to ensure that Australian businesses are not disadvantaged by the availability of cheaper imported goods when no equivalent product is manufactured locally. The explanatory statement for Tariff Concession Instrument No. 1140539, made on 13 February 2012, illustrates this process in practice. Tindo Pty Ltd applied for a TCO concerning certain film, and following the CEO's determination that no substitutable goods were produced in Australia, the CEO issued a TCO, thereby granting a concession on the duty for these goods.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO), aimed at providing a lower rate of customs duty on specified goods. This legislation applies to any person or entity that submits an application for a TCO in respect of goods not listed in section 269SJ of the Act, which includes goods that cannot be subject to a TCO. The application process involves ensuring that no substitutable goods, meaning those produced in Australia that could serve the same use as the goods in question, are being produced in the ordinary course of business on the date the application is lodged. If the CEO determines that the application meets the core criteria, a TCO is issued, providing tariff relief on specified goods. The geographic and jurisdictional reach of this Act is national, as it is a Commonwealth legislation. While the Act itself sets the framework for TCOs, the detailed application of these concessions can be further refined through subordinate instruments, although no such extensions or restrictions are mentioned in this specific context.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs (the CEO) can grant lower rates of customs duty on certain goods (s 269F). Specifically, section 269C of the Act sets out the core criteria that an application for a TCO must meet, namely that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order declaring the goods to which the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (s 269P(3)).
The Act imposes several obligations on the parties involved in the TCO process. An applicant must submit an application to the CEO for a TCO, and the CEO must determine whether the application meets the core criteria (s 269F). Once the CEO is satisfied that the application meets these criteria, they must make a TCO (s 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be made to lodge a submission (s 269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice. The TCO also affects the rights of importers, who can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (Reg 126(1)(r)).
Failure to comply with the provisions of the Act can lead to various consequences. While the Act does not specify penalties for failing to meet the core criteria, it is clear that any breach of the Act's provisions could result in civil or criminal liability. The Act does not impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration of the TCO (s 269S(1)). However, if a person knowingly or negligently contravenes any provision of the Act, they may be subject to a penalty, which can include fines or imprisonment, depending on the severity of the offence (s 274). The maximum penalties for offences under the Customs Act 1901 can be substantial, with fines ranging from several thousand to several hundred thousand dollars, depending on the nature of the offence. In some cases, imprisonment for up to five years may also apply (s 274).