EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1141390
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.
Sulo MGB Australia applied for a TCO in respect of certain lids on 13 December 2011.
Instrument
TCO No 1141390 was made on 06 March 2012. It declares that those certain lids 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. 1141390 is taken to have come into force on 13 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 was enacted to provide a comprehensive framework for the administration of customs duties and related matters in Australia. It was introduced to address the need for streamlined customs processes and effective regulation of imported goods. This Act establishes the authority for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which provide tariff concessions on certain goods under specific conditions. The objective of this legislative framework is to facilitate trade by reducing customs duty rates on goods for which no substitutable Australian-made alternatives exist. This aims to support industries by lowering the cost of imported goods, thereby enhancing competitiveness and potentially stimulating economic growth.
The Tariff Concession Instrument No. 1141390, issued under the Customs Act 1901, exemplifies this legislative intent. It was enacted by the Chief Executive Officer of Customs in response to an application from Sulo MGB Australia for tariff concessions on certain lids. The instrument declares that these lids are subject to a free rate of duty, down from the general rate of 5%, as no substitutable goods are produced in Australia. This concession took effect from 13 December 2011, the date the application was lodged. The instrument ensures that the rights of importers are positively affected, allowing them to apply for duty refunds on imports since the effective date. Importantly, it does not disadvantage or impose liabilities on any person other than the Commonwealth, aligning with the policy objective of facilitating smoother trade operations.
Scope and Application
The Customs Act 1901, through Part XVA, outlines the process by which Tariff Concession Orders (TCO) can be made by the Chief Executive Officer of Customs. These orders apply to specific goods that are subject to a lower rate of customs duty. An individual or entity can apply for a TCO provided the goods in question are not excluded under section 269SJ of the Act, and the application meets the core criteria specified in sections 269C and 269F. Specifically, the application must be for goods for which no substitutable goods are produced in Australia in the ordinary course of business. If the CEO determines that these criteria are satisfied, they are required to issue a written TCO. For instance, Sulo MGB Australia's application for certain lids was approved because no substitutable goods were produced in Australia, resulting in a Tariff Concession Order No. 1141390 that set the duty rate for these lids at free, down from the general rate of 5%. The Act also stipulates that any person who believes a TCO should not be made has the opportunity to lodge a submission with the CEO, though no submissions were received in response to the Gazette notice for this particular TCO. The TCO does not impact existing rights or impose new liabilities on anyone except the Commonwealth.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) pertaining to Tariff Concession Orders (TCOs) are primarily sections 269C, 269B, 269E, and 269P. Section 269C outlines the core criteria that a TCO application must meet, specifically that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B defines key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." Section 269E further clarifies what constitutes the "ordinary course of business," while section 269P mandates that if the Chief Executive Officer of Customs (the CEO) is satisfied that an application meets the core criteria, they must make a written TCO order.
The Act imposes several obligations on the parties involved in the TCO process. Firstly, an applicant must submit an application to the CEO for a TCO in respect of specific goods, ensuring that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO has the responsibility of reviewing the application, verifying that it meets the core criteria specified in section 269C, and ensuring that the application does not involve goods that are substitutable and produced in Australia. Additionally, the CEO must publish a notice in the Gazette inviting any interested party to lodge submissions if they believe the TCO should not be made, as outlined in subsection 269K(1).
The legislation also delineates various consequences for non-compliance or breaches. While the Act does not explicitly detail civil or criminal penalties for breaches related to TCOs, any misuse or fraudulent application could potentially lead to legal ramifications under broader provisions of the Customs Act 1901 or other applicable legislation. The Act ensures that the rights of importers are positively affected and that no new liabilities are imposed on any person, other than the Commonwealth, in respect of actions taken before the TCO is registered. Importers may also apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.