EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506585
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.
HC Expansion Pty Ltd applied for a TCO in respect of certain Motors on 2 June 2005.
Instrument
TCO No 0506585 was made on 21 October 2005. It declares that those certain Motors 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 0%.
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. 0506585 is taken to have come into force on 2 June 2005.
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 includes provisions for the establishment of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce the rate of customs duty on certain goods. The 2005 Explanatory Statement F2005L03339 outlines Tariff Concession Instrument No. 0506585, which was introduced to address the need for tariff concessions for specific goods that are not produced domestically. The policy objective is to provide tariff relief for imported goods that do not have a domestic substitute, thereby encouraging trade and potentially lowering consumer prices. This instrument was designed to ensure that the application process for TCOs is transparent and allows for public submissions, although in this instance, no submissions were received. The instrument ensures that the implementation of the tariff concession does not adversely affect existing rights or impose new liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to individuals or entities seeking tariff concessions for imported goods that are not currently produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, as it pertains to the Australian Customs Act, and it applies to all goods subject to the Customs Tariff Act 1995. The Act excludes goods specified in section 269SJ, which are ineligible for tariff concessions. The application of the Act may be extended or restricted through subordinate instruments, such as regulations or further orders, that define terms like "substitutable goods" and "ordinary course of business". For instance, TCO No. 0506585 was made under this framework, applying a 0% duty rate to certain motors from 2 June 2005, the date the application was lodged, and this order does not impose any liabilities on any person or disadvantage anyone's rights as at the date of registration.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically in relation to Tariff Concession Orders (TCOs), are sections 269C, 269F, and 269P. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO, while section 269C outlines the core criteria that the application must meet, such as the absence of substitutable goods produced in Australia. Section 269P mandates that if the CEO determines the application meets these criteria, they must issue a written order, the TCO itself, which specifies the applicable duty rate.
The obligations imposed on parties by this Act are primarily centred around the application process for TCOs. An applicant must ensure their application complies with the core criteria, particularly that no substitutable goods are produced in Australia on the day the application is lodged. The CEO has an obligation to assess the application against these criteria and, if satisfied, to issue the TCO. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections, although in this case, no objections were received.
There are no specific offences, penalties, or civil/criminal consequences outlined for breaching the provisions related to TCOs within this explanatory statement. However, non-compliance with the Act or failure to adhere to the terms of a TCO could potentially lead to administrative actions, including the revocation of the TCO or other regulatory measures. The general rate of duty for the goods in question is 5%, and under the TCO, this rate is reduced to 0%. Therefore, any breach that results in the incorrect application of the duty rate could lead to financial implications for the importer or the Commonwealth.