EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514785
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.
Wambo Coal Pty Ltd applied for a TCO in respect of certain Coal Handling and Preparation Plant on 21 October 2005.
Instrument
TCO No 0514785 was made on 16 February 2006. It declares that those certain Coal Handling and Preparation Plant 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. One submission objecting to the TCO
application was received from Abon Engineering Pty Ltd.
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. 0514785 is taken to have come into force on 21 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 Parliament of Australia, establishes a framework for the imposition of customs duties on imported goods. One of the mechanisms under this Act is the Tariff Concession Order (TCO), which allows for reduced or waived customs duties on specific goods. The problem or gap that this mechanism addresses is the potential for reduced economic burden on importers of goods that cannot be substituted with locally produced alternatives, thereby promoting competitive advantage and encouraging trade. The Customs Act 1901, through Part XVA, allows the Chief Executive Officer of Customs to make TCOs based on applications that meet certain core criteria, such as the absence of substitutable goods produced in Australia. The policy objective behind the creation of TCOs is to provide relief to importers and to support the efficient functioning of trade by reducing unnecessary costs associated with customs duties on non-substitutable goods.
Scope and Application
The Tariff Concession Instrument No. 0514785 under the Customs Act 1901 applies to Wambo Coal Pty Ltd, specifically in relation to certain Coal Handling and Preparation Plant. The application of this instrument is geographically confined to the Commonwealth of Australia and is part of a broader scheme where Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. The Act applies to individuals or entities seeking tariff concessions for goods not produced in Australia in the ordinary course of business, thereby qualifying for reduced customs duty rates. The TCO was made effective from the date the application was lodged, 21 October 2005, and it grants a zero percent duty rate on the specified goods, as opposed to the general rate of 5%. The legislation does not disadvantage any person other than the Commonwealth and does not impose any liabilities on persons other than the Commonwealth in respect of actions taken prior to the TCO's registration. Importers can apply for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines a framework for Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P). An application for a TCO can be submitted by any person to the Chief Executive Officer of Customs (CEO) (section 269F). If the application is deemed valid and not concerning goods prohibited by section 269SJ, the CEO evaluates whether it meets the core criteria (section 269C). A TCO application satisfies the core criteria if, on the application date, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). "Substitutable goods" are defined as those produced in Australia that could serve the same purpose as the goods in question (section 269D, 269E).
The obligations imposed by the Act on the parties involved are primarily on the CEO. Upon receiving a valid TCO application, the CEO must publish a notice in the Gazette, inviting any interested parties to object to the TCO if they have reasons to do so (subsection 269K(1)). The CEO must then consider any submissions received and decide whether to proceed with the TCO. If satisfied that the application meets the core criteria, the CEO must issue a written order, making the goods subject to a prescribed lower rate of customs duty (subsection 269P(3)).
Breach of the provisions outlined in the Customs Act 1901 and related regulations can result in both civil and criminal consequences. For example, providing false information in a TCO application can be considered an offence under section 230 of the Act, punishable by a fine of up to 5,000 penalty units or imprisonment for up to five years, or both. Similarly, failing to comply with the customs duties as prescribed by a TCO could result in financial penalties and potential prosecution. The maximum penalties for such offences are specified in the relevant sections of the Act and related regulations, ensuring that all parties are aware of the potential legal repercussions of non-compliance.