EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514067
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.
Tenix Defence Pty Ltd applied for a TCO in respect of certain DC Motors on 10 October 2005.
Instrument
TCO No 0514067 was made on 9 January 2006. It declares that those certain DC 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. 0514067 is taken to have come into force on 10 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 Customs Act 1901, enacted by the Commonwealth Parliament, addresses the need for a structured approach to granting tariff concessions for specific imported goods. The Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which lower the rate of customs duty on specified goods. This legislative framework was introduced to support Australian industries by reducing the cost of imported components and materials, thereby fostering competitiveness. The policy objective is to facilitate the import of goods that are not produced domestically, ensuring that Australian businesses can access necessary inputs without the burden of high customs duties. This is particularly beneficial for industries that rely on imported parts and materials for their operations. The process requires that applications for TCOs be assessed against criteria ensuring that the goods in question are not produced in Australia and are essential for the relevant industry. The Customs Act 1901 thus provides a mechanism for economic efficiency and industrial support through targeted tariff reductions.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This Act applies to any person who may apply for a TCO in respect of goods, provided the goods do not fall under the restricted categories specified in section 269SJ of the Act. The Act mandates that the CEO must consider applications against core criteria, notably the absence of substitutable goods produced in Australia, as defined by sections 269D and 269E. Once an application meets these criteria, the CEO must issue a TCO, effectively reducing the customs duty for the specified goods. For instance, Tariff Concession Order No. 0514067, issued on 9 January 2006, pertains to certain DC Motors, reducing the duty rate from 5% to 0%. The CEO is required to publish notices in the Gazette inviting submissions from interested parties, although in this case, no submissions were received. The TCOs come into force on the date the application is lodged and do not retroactively affect existing rights or impose new liabilities on individuals other than the Commonwealth.
Key Provisions
The Tariff Concession Order (TCO) No. 0514067 under the Customs Act 1901 (the Act) pertains specifically to certain DC Motors. Section 269F of the Act allows an application for a TCO to be submitted to the Chief Executive Officer (CEO) of Customs, provided the goods in question are not listed in section 269SJ, which specifies goods that cannot be subject to a TCO. If the CEO determines that the application meets the core criteria outlined in section 269C, they must issue a written order declaring that the specified goods are subject to a lower rate of customs duty, as per section 269P(3). In this case, the DC Motors are declared as subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a customs duty rate of 0% instead of the general rate of 5%.
The obligations imposed by the Act on the parties involved are clear and straightforward. Section 269K(1) mandates that the CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not proceed. This ensures transparency and provides an opportunity for stakeholders to voice any concerns. In this instance, the CEO did not receive any submissions, indicating that there were no objections to the issuance of the TCO. Furthermore, the Act stipulates that the TCO does not affect the rights of any person as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken prior to the registration date, as per section 269S(1).
Should there be a breach of the provisions outlined in the Act, the consequences can be significant. While the explanatory statement does not specify particular offences or penalties, the Customs Act 1901 does provide for various penalties for breaches, which can include fines and imprisonment, depending on the severity of the offence. It is essential for entities and individuals governed by this legislation to adhere to the stipulated requirements to avoid these potential consequences. The Act's framework is designed to ensure that tariff concessions are granted fairly and in accordance with the prescribed criteria, maintaining the integrity of the customs duty system.