EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506648
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.
Melroad Equipment Pty Ltd applied for a TCO in respect of certain hydraulic excavators on 31 May 2005.
Instrument
TCO No 0506648 was made on 07 October 2005. It declares that those certain hydraulic excavators 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. 0506648 is taken to have come into force on 31 May 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 Parliament of Australia, provides a framework for the administration of customs and excise through the establishment of a comprehensive tariff system, including the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) as stipulated in Part XVA. The primary problem this legislation addresses is the facilitation of trade by providing tariff concessions to importers who can demonstrate that no substitutable goods are produced in Australia, thereby encouraging the importation of certain goods without the imposition of customs duty. The policy objective, as evidenced by the explanatory statement, is to ensure that trade is facilitated while maintaining a fair and efficient customs regime.
The Tariff Concession Instrument No. 0506648, issued under this Act, exemplifies the application of the TCO scheme. Specifically, it was enacted to provide tariff concessions for certain hydraulic excavators, effectively reducing the duty from the general rate of 5% to free duty. This instrument was made following an application by Melroad Equipment Pty Ltd, which sought the concession on 31 May 2005. The CEO of Customs, satisfied that the application met the core criteria and that no substitutable goods were produced in Australia, issued the concession on 7 October 2005. The instrument came into effect on the date of the application, 31 May 2005, without affecting any pre-existing rights or imposing new liabilities on non-Commonwealth persons.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the Chief Executive Officer (CEO) of Customs to grant Tariff Concession Orders (TCOs) to certain goods, which results in a reduced rate of customs duty. This Act applies to any person or entity that seeks to import goods that are eligible for a TCO. The CEO must determine whether an application for a TCO meets the core criteria, including whether substitutable goods are produced in Australia, and whether the goods in question are not specified in section 269SJ of the Act, which lists items that cannot be subject to a TCO. This legislation operates on a Commonwealth level, impacting all states and territories within Australia. Any exclusions from the scope of a TCO are clearly defined within the Act, ensuring that the benefits of a TCO are limited to those goods explicitly mentioned. The Act allows for the extension of its application through subordinate instruments, which may provide further clarity or detail on the administration and application of TCOs.
Key Provisions
The main operative sections of the Customs Act 1901, specifically Part XVA, outline the process by which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Section 269F allows a person to apply to the CEO for a TCO in respect of goods. If the application meets the core criteria under section 269C, the CEO must make a written order that declares the goods to which the concession applies. This is further defined in section 269P(3), which mandates the CEO to make a TCO if satisfied that the application meets the core criteria, specifically if no substitutable goods were produced in Australia on the date the application was lodged. TCO No. 0506648, issued on 7 October 2005, declared that certain hydraulic excavators are subject to a duty rate of free, as opposed to the general rate of 5%, because no substitutable goods were produced in Australia.
The obligations imposed by the Act on the parties involved are clear and straightforward. The CEO is required to assess whether an application for a TCO meets the core criteria under section 269C. If the CEO is satisfied, they must make a TCO under section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In the case of TCO No. 0506648, no submissions were received in response to the Gazette notice. The TCO is taken to have come into force on the date the application was lodged, which is 31 May 2005, as stipulated by section 269S(1). Importantly, the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration, and does not impose any liabilities on any person.
In terms of potential offences and penalties, the Act does not explicitly detail the penalties for non-compliance with the TCO provisions. However, if an entity fails to comply with the requirements of the TCO or the Act, they may face legal consequences. For example, if a party imports goods that are subject to a TCO without adhering to the terms, they could be liable for the applicable duty under the general rate, not the concession rate. While the specific penalties are not outlined in the Act, breaches of customs regulations can typically lead to fines, penalties, or other enforcement actions by the Australian Border Force. Additionally, if an entity intentionally misleads the CEO or provides false information to secure a TCO, they could face criminal charges under other sections of the Customs Act, which could result in substantial fines and imprisonment.