EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516387
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.
Knorr-Bremse Australia Pty Ltd applied for a TCO in respect of certain commercial brake parts on 21 November 2005.
Instrument
TCO No 0516387 was made on 30 January 2006. It declares that the commercial 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 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. 0516387 is taken to have come into force on 21 November 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 Order No. 0516387, enacted under the Customs Act 1901, addresses the problem of ensuring tariff concessions are applied correctly to specific goods, allowing for a lower rate of customs duty for those goods that meet certain criteria. The enactment of this order was necessary to provide a streamlined process for businesses to apply for tariff concessions, ensuring that goods for which no substitutable alternatives are produced domestically can benefit from reduced customs duties. The enacting body, the Chief Executive Officer of Customs, is mandated to make these orders under section 269F of the Customs Act, with the policy objective being to support Australian businesses by reducing the cost of importing certain goods, thereby enhancing their competitiveness in the market.
The explanatory statement indicates that Knorr-Bremse Australia Pty Ltd applied for the tariff concession concerning commercial brake parts, and the order was issued on 30 January 2006, following the CEO's satisfaction that no substitutable goods were produced in Australia. This order effectively reduces the duty on these specific brake parts from the general rate of 5% to free, starting from the date of application on 21 November 2005. The implementation of this order does not adversely affect any rights of individuals or impose new liabilities, and it allows importers to seek refunds for duties paid on these goods since the commencement date.
Scope and Application
The Tariff Concession Instrument No. 0516387, made under the Customs Act 1901, applies to the specific commercial brake parts for which Knorr-Bremse Australia Pty Ltd applied on 21 November 2005. The Act facilitates the application for Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to reduce customs duty on certain goods if no substitutable goods are produced in Australia. The application by Knorr-Bremse Australia Pty Ltd was assessed against the core criteria set out in section 269C of the Act, and upon satisfaction, a TCO was issued, effective from the date of application. This TCO exempts the specified commercial brake parts from the general 5% duty rate, granting them a duty-free status as per item 50 of Schedule 4 to the Customs Tariff Act 1995. The scope of the TCO is limited to the goods specified in the application and does not extend to any other goods unless similarly applied for and approved. The Act ensures that the TCO does not disadvantage any person or impose liabilities on anyone for actions taken before the TCO's effective date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0516387 under the Customs Act 1901 (section 269F) require that the Chief Executive Officer of Customs (CEO) may grant a Tariff Concession Order (TCO) for certain goods if the application meets the core criteria set out in the Act. A TCO application is deemed to meet these core criteria if, on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order (section 269P(3)) that specifies the lower rate of customs duty applicable to the goods in question.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid. This notice must invite 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)). In this case, no submissions were received in response to the notice. Additionally, the CEO must determine whether the application meets the core criteria and, if satisfied, make a written TCO.
The Act provides for both civil and potential criminal consequences for breach. For example, under section 269SJ of the Act, certain goods cannot be subject to a TCO, and failure to adhere to this provision could result in a breach. Additionally, the Act does not impose any liabilities on any person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. Importers, however, 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 (paragraph 126(1)(r) of the Regulations). The specific penalties for breaches are not detailed in the explanatory statement, but breaches of customs laws generally carry significant penalties under the Customs Act 1901.