EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510203
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.
Custom Fluid Power Pty Ltd applied for a TCO in respect of certain Industrial Disc Brake Parts on 3 August 2005.
Instrument
TCO No 0510203 was made on 21 October 2005. It declares that those certain Industrial Disc Brake Parts 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. 0510203 is taken to have come into force on 3 August 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 was enacted by the Australian Parliament to provide a framework for the regulation of customs and excise duties, including the establishment of tariff concession schemes. The Act was introduced to address the need for a structured approach to concession on customs duties, allowing for more competitive pricing and economic efficiency in certain sectors. Specifically, it allows the Chief Executive Officer of Customs to grant tariff concession orders on goods that are not produced domestically and for which there are no substitutable products available in Australia, thus ensuring fair competition and supporting import-dependent industries. Policy objectives include promoting economic growth by facilitating access to cheaper imported goods and supporting Australian businesses that rely on importing specific components or materials.
Scope and Application
The Tariff Concession Instrument No. 0510203 under the Customs Act 1901 applies to Industrial Disc Brake Parts and is administered by the Chief Executive Officer of Customs. This Instrument pertains to entities and individuals involved in the importation of these specific goods, particularly those who can demonstrate that no substitutable goods are produced in Australia, thereby qualifying for a lower rate of customs duty. The geographic reach of this Act is national, as it applies throughout Australia and is in accordance with the provisions of the Customs Act 1901. The Instrument excludes any goods specified in section 269SJ of the Act that are ineligible for tariff concessions. The scope of the Instrument may be extended or restricted through subordinate instruments, but in this instance, it specifically addresses the application made by Custom Fluid Power Pty Ltd and the resulting tariff concession. The Instrument came into force on 3 August 2005, the date the application was lodged, and does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person in respect of actions taken before its registration.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0510203 under the Customs Act 1901 (referred to as the Act) pertain to the application and issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. Specifically, section 269F allows an individual or entity to apply to the CEO for a TCO concerning certain goods, while section 269C sets forth the core criteria that must be met for the CEO to consider granting the TCO. This includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged. If these criteria are met, the CEO is obligated under section 269P(3) to issue a written TCO, as seen in the case of Industrial Disc Brake Parts, where the CEO declared a 0% duty rate instead of the general 5% rate, as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved are primarily directed at the CEO. The CEO must, upon receiving a TCO application, verify that it complies with the criteria outlined in section 269C. This involves assessing whether substitutable goods are being produced in Australia on the application date. Additionally, the CEO is required to publish a notice in the Gazette under subsection 269K(1), inviting any interested party to submit objections if they believe the TCO should not be issued. In the case of TCO No. 0510203, no objections were received. Furthermore, the CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on them regarding actions taken before the TCO's effective date.
Failure to comply with the requirements of the Customs Act 1901 or the associated regulations can result in various penalties. While the specific offences and penalties are not detailed in the explanatory statement, the general nature of breaches under the Customs Act could include fines or imprisonment. For instance, fraudulent applications or misrepresentations in the application process could be prosecuted under the criminal provisions of the Act. Additionally, civil penalties could be imposed for non-compliance with the terms of the TCO, although the maximum penalties are not specified in this context. It is important to note that any penalties would be commensurate with the severity and intent of the breach.