EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603134
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.
Tomcar Pty Ltd applied for a TCO in respect of certain all terrain vehicles on 27 January 2006.
Instrument
TCO No 0603134 was made on 21 April 2006. It declares that those certain all terrain vehicles 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. 0603134 is taken to have come into force on 27 January 2006.
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 Australian Parliament, provides a framework for the administration of customs and excise, including a scheme for Tariff Concession Orders (TCOs) outlined in Part XVA. This legislative framework was designed to address the need for a mechanism to reduce or eliminate customs duties on specific goods under certain conditions, thereby facilitating trade and economic efficiency. The explanatory statement for Tariff Concession Instrument No. 0603134, issued on 21 April 2006, clarifies the application of this scheme. It details how Tomcar Pty Ltd successfully applied for a TCO for certain all terrain vehicles, resulting in a duty rate reduction from 5% to 0% for those vehicles. The process followed by the Chief Executive Officer of Customs in making this decision, including the requirement to consider whether substitutable goods were produced in Australia, is also outlined. The instrument ensures that the rights of importers are positively impacted and that no liabilities are imposed on non-Commonwealth entities as a result of the TCO.
Scope and Application
The Tariff Concession Order No. 0603134 under the Customs Act 1901 applies to Tomcar Pty Ltd and their application for certain all terrain vehicles. The Act governs the process by which the Chief Executive Officer of Customs can issue a Tariff Concession Order (TCO), which effectively reduces the rate of customs duty on specific goods. This instrument was designed to benefit entities such as Tomcar Pty Ltd, which applied for tariff concessions on 27 January 2006. The application was successful, and the TCO was made on 21 April 2006, specifying that these all terrain vehicles are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of 0% instead of the general 5%. The geographic reach of this legislation is national, as it applies across Australia under the Commonwealth. The Act does not specify any exclusions, but it does note that certain goods, as outlined in section 269SJ of the Customs Act 1901, cannot be subject to a TCO. Additionally, the Act allows for further regulation and extension of application through subordinate instruments, although this particular TCO does not extend or restrict its application beyond what is stated.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the process and criteria for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269F allows for the application for a TCO for specific goods, provided they are not specified in section 269SJ which lists goods that cannot be subject to a TCO. The CEO must consider whether the application meets the core criteria as stipulated in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively.
When the CEO is satisfied that an application meets the core criteria, they must make a written TCO, as per section 269P(3), declaring the applicable prescribed item of Schedule 4 to the Customs Tariff Act 1995. This was demonstrated in TCO No. 0603134, which was issued on 21 April 2006, declaring certain all terrain vehicles to be subject to a 0% duty rate under item 50 of Schedule 4 of the Tariff, as no substitutable goods were produced in Australia. The general rate of duty for these goods is 5%, but the concession reduces this to 0%.
The CEO is also required to publish a notice in the Gazette inviting any person to lodge submissions if they believe there are reasons why the TCO should not be made, as outlined in subsection 269K(1). However, in this case, no submissions were received. A TCO is taken to have come into force on the day on which the application for the TCO was lodged, as per subsection 269S(1). For TCO No. 0603134, this was 27 January 2006.
Regarding obligations and requirements, the TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration in a way that disadvantages that person or imposes liabilities for actions taken before the registration date. Importers stand to benefit as they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.
In terms of offences and penalties, the explanatory statement does not specify any particular breaches or penalties for non-compliance with the TCO or the Act. However, breaches of customs regulations generally can lead to civil or criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach.