EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516758
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.
Hitachi Ltd applied for a TCO in respect of certain coal feeders on 6 December 2005.
Instrument
TCO No 0516758 was made on 18 May 2006. It declares that those certain coal feeders 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.
Further, subsection 269M(1) of the Act provides that if the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO. The CEO invited Terex Jaques to lodge a written submission.
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. 0516758 is taken to have come into force on 6 December 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 through which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) that apply reduced rates of customs duty to specific goods. This Act was introduced to address the need for flexibility in tariff rates to support Australian industries, particularly by allowing for tariff reductions on goods that are not produced domestically. TCO No. 0516758, issued on 18 May 2006, exemplifies this mechanism by granting a zero percent duty rate on certain coal feeders, as no substitutable goods were found to be produced in Australia. The process involves public consultation as mandated by the Act, ensuring transparency and opportunity for stakeholders to voice their concerns regarding the proposed tariff concession. The policy objective of this legislation is to provide economic benefits by reducing import costs for specific goods, thereby potentially stimulating demand and supporting market competitiveness.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0516758, provides a framework for the Chief Executive Officer (CEO) of Customs to grant Tariff Concession Orders (TCOs) that lower the customs duty on specified goods. This Act applies to any person or entity that seeks to import goods eligible for a tariff concession, provided the goods are not specified as ineligible under section 269SJ. The application process requires the applicant to demonstrate that no substitutable goods are produced in Australia, which means that the goods they wish to import are not being manufactured domestically in a way that corresponds to their intended use. The CEO's decision to grant a TCO is contingent upon satisfying the core criteria outlined in section 269C, which involves a thorough assessment of the production status of substitutable goods in Australia as per sections 269D and 269E. This Act operates on a national level across Australia, applying uniformly regardless of state or territory boundaries. The scope of the Act is further defined by the exclusions and conditions set out in the Customs Tariff Act 1995, which dictates the rates of duty applied to goods. The commencement of a TCO is retroactive to the date of the application, ensuring that the rights of importers are protected and they may claim refunds on duties paid prior to the official registration date. This legislative mechanism facilitates trade by reducing the cost of imported goods, provided they meet the specified criteria and undergo the requisite consultation and assessment processes.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0516758, issued under the Customs Act 1901, pertain to the application and determination of Tariff Concession Orders (TCOs) for certain goods. Section 269F allows for an application to be made by a person to the Chief Executive Officer (CEO) of Customs for a TCO, which results in a lower rate of customs duty for the specified goods. Section 269C outlines the core criteria for a TCO, requiring that no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) mandates that if these criteria are met, the CEO must issue a written TCO. For instance, in this case, Hitachi Ltd successfully applied for a TCO for certain coal feeders, which were subsequently subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved in the TCO process. For the CEO of Customs, these include the duty to assess whether an application meets the core criteria and, if so, to issue a TCO. Section 269K(1) further requires the CEO to publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be granted. The CEO may also invite specific parties to submit written objections under section 269M(1). In this particular instance, submissions were received from Abon Engineering Pty Ltd and Terex Jaques, demonstrating the process of stakeholder engagement. Additionally, the Act ensures that the rights of importers are beneficially affected, with provisions for duty refunds under paragraph 126(1)(r) of the Regulations.
Breaching the obligations set out in the Customs Act 1901 can lead to various consequences. Although the Act does not explicitly state offences, penalties, or civil/criminal consequences for non-compliance with the TCO process itself, the broader Customs Act contains provisions for offences and penalties. For example, section 244A outlines the offence of fraud or deception in relation to customs, which can attract significant penalties, including fines of up to $22,000 or imprisonment for up to five years, or both, for individuals. Corporations may face higher fines, up to 10,000 penalty units, which is a substantial amount given the current penalty unit value of $220. Additionally, breaches of other provisions of the Customs Act, such as incorrect or fraudulent declarations, can also lead to financial penalties and potential criminal sanctions.
Overall, Tariff Concession Instrument No. 0516758 exemplifies the legislative framework for TCOs under the Customs Act 1901, detailing the application process, criteria for approval, and the engagement of stakeholders. It outlines the obligations of the CEO in assessing applications and the rights of importers to benefit from reduced duty rates. While the specific consequences of breaching the Act's provisions are not detailed in the explanatory statement, the broader legal context provides a framework for enforcement, including significant penalties for non-compliance.