EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0513493
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.
Michelle’s Motors Pty Ltd applied for a TCO in respect of certain Trucks on 4 October 2005.
Instrument
TCO No 0513493 was made on 23 December 2005. It declares that those certain Trucks 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. 0513493 is taken to have come into force on 4 October 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 Tariff Concession Instrument No. 0513493 was enacted in 2005 under the Customs Act 1901, which governs the tariff concessions available for certain imported goods. This instrument was introduced to address the specific need for tariff concessions on goods for which no substitutable domestic production exists. The Customs Act 1901 establishes a framework through which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs), effectively reducing the customs duty on eligible imported goods. Michelle’s Motors Pty Ltd applied for a TCO for certain trucks, and after thorough assessment, the CEO determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria. Consequently, the TCO was issued, setting the duty rate at 0% for these trucks, down from the general rate of 5%.
The policy objective behind this legislation is to encourage the importation of goods where there is no domestic alternative, thus supporting market access and potentially lowering costs for businesses importing these goods. The instrument was published in the Gazette, inviting public submissions, none of which were received, indicating broad acceptance or lack of opposition to the concession. The TCO took effect from the date of the application, 4 October 2005, and provides benefits to importers by allowing them to apply for duty refunds on goods imported since that date. Importantly, the TCO does not disadvantage any person or impose new liabilities on anyone.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders, applies to goods specified in an application for a tariff concession, provided the application meets the core criteria set out in the Act. Specifically, the Act applies to goods for which an applicant can demonstrate that no substitutable goods are produced in Australia in the ordinary course of business. The application process and subsequent decision by the Chief Executive Officer of Customs determine the eligibility of the goods for tariff concessions, which can result in a reduction or elimination of customs duty. The geographic reach of this legislation is national, as it pertains to goods imported into Australia and administered under the Commonwealth. The Act does not apply to goods listed in section 269SJ, which are specified as ineligible for tariff concessions. Additionally, the Act allows for the extension of its application through subordinate instruments, such as regulations, which may provide further detail on the administration and enforcement of tariff concessions.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0513493 (the Instrument) under the Customs Act 1901 (the Act) concern the application and approval of Tariff Concession Orders (TCOs). Section 269F allows for an application to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of certain goods, provided they do not fall under the exclusions specified in section 269SJ. If the CEO is satisfied that the application meets the core criteria, outlined in sections 269B, 269C, 269D, and 269E, the CEO must make a written order (TCO) (section 269P(3)). The Instrument itself declares that certain trucks are subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from the date of the application, 4 October 2005.
The obligations imposed on parties by the Act and the Instrument include ensuring that applications for TCOs are made in accordance with the Act. Specifically, applicants must demonstrate that the goods for which they seek concession are not substitutable by goods produced in Australia and meet the criteria specified in sections 269B, 269C, 269D, and 269E. The CEO must then publish a notice in the Gazette inviting submissions from interested parties, as required by subsection 269K(1). Additionally, the CEO must make a written TCO if the application meets the core criteria.
Failure to comply with the requirements of the Act or the Instrument can lead to significant consequences. Although the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally can result in both civil and criminal penalties under the Customs Act 1901. Civil penalties may include fines up to the statutory maximum, while criminal penalties can include imprisonment and fines. The precise penalties would depend on the nature and severity of the breach, but the Act provides a framework for enforcement by the Australian Customs and Border Protection Service.