EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506771
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.
Brisbane Mini Excavator Sales applied for a TCO in respect of certain crawler mounted excavators on 3 June 2005.
Instrument
TCO No 0506771 was made on 9 September 2005. It declares that the certain crawler mounted 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. 0506771 is taken to have come into force on 3 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, addresses the need for tariff concessions to promote trade and economic efficiency. The Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs to lower customs duty rates on certain imported goods under specific conditions. The 2005 Tariff Concession Instrument No. 0506771, introduced to facilitate this process, aims to provide tariff relief to businesses by ensuring that no domestic production of substitutable goods exists, thus enhancing competitiveness. The instrument was made in response to an application by Brisbane Mini Excavator Sales for a concession on certain crawler mounted excavators, which were declared to have a free duty rate as of the application date, 3 June 2005. This approach aligns with the policy objective of the Customs Act to balance trade facilitation with revenue collection.
Scope and Application
The Tariff Concession Instrument No. 0506771 under the Customs Act 1901 applies specifically to the application by Brisbane Mini Excavator Sales for tariff concessions on certain crawler mounted excavators. The legislation pertains to the process by which the Chief Executive Officer of Customs evaluates and grants tariff concessions on goods that are not substitutable by goods produced in Australia. The concessions apply to the specific goods detailed in the Instrument, which in this case are certain crawler mounted excavators, reducing their customs duty rate to free from the general rate of 5%. The Act extends to the entire Commonwealth of Australia and its operation is not limited by state or territory boundaries. However, the application and concession are subject to exclusions specified under section 269SJ of the Act, which prohibits certain goods from being subject to a TCO. The instrument itself is effective from the date the application was lodged, 3 June 2005, and does not affect any existing rights or liabilities of persons other than the Commonwealth. The Instrument’s scope is further defined and potentially extended through subordinate instruments such as regulations, which may provide additional criteria and processes for tariff concession applications.
Key Provisions
The main operative sections of this legislation are sections 269C, 269B, 269E, and 269P(3) of the Customs Act 1901 (the Act). Section 269C outlines the core criteria that must be met for an application for a Tariff Concession Order (TCO) to be considered valid. Section 269B provides definitions for terms such as ‘goods produced in Australia’ and ‘ordinary course of business’, while section 269E defines ‘ordinary course of business’. Section 269P(3) mandates that if the Chief Executive Officer of Customs (the CEO) is satisfied that a TCO application meets the core criteria, the CEO must issue a written TCO that specifies the goods to which the order applies.
Under this legislation, the CEO is required to consider applications for TCOs and determine whether they meet the core criteria set out in section 269C of the Act. If the CEO is satisfied that the application meets these criteria, they must issue a TCO that declares the goods to which the order applies, as specified in section 269P(3). The CEO is also required to publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO (subsection 269K(1) of the Act). The CEO must then consider any submissions received before deciding whether to issue the TCO.
Breaching the provisions of this legislation may result in civil or criminal penalties, depending on the nature and severity of the offence. For example, importing goods that are subject to a TCO without paying the appropriate duty may result in a fine of up to $22,200 for individuals or $111,000 for corporations (subsection 282AB(4) of the Act). Similarly, providing false or misleading information in an application for a TCO may result in a fine of up to $11,100 for individuals or $55,500 for corporations (subsection 282AB(5) of the Act). In more serious cases, individuals may face imprisonment for up to two years, while corporations may be fined up to the greater of three times the value of the benefit obtained through the offence or $111,000 (subsection 282AB(6) of the Act).
In summary, this legislation sets out the process for applying for and issuing TCOs under the Customs Act 1901. The CEO is responsible for considering applications and determining whether they meet the core criteria set out in the Act. If the CEO is satisfied that an application meets these criteria, they must issue a TCO that specifies the goods to which the order applies. Failure to comply with the provisions of this legislation may result in civil or criminal penalties, depending on the nature and severity of the offence.