EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604599
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.
Tyres4u applied for a TCO in respect of certain buses or lorries tyres on 16 February 2006.
Instrument
TCO No 0604599 was made on 5 May 2006. It declares that those certain buses or lorries tyres 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 10%. 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. 0604599 is taken to have come into force on 16 February 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 Tariff Concession Instrument No. 0604599, enacted on 5 May 2006 under the Customs Act 1901, was introduced to address the need for tariff concessions on specific goods, in this case, certain bus and lorry tyres. The primary objective of this legislation was to provide relief from customs duties for imported goods that are not produced in Australia and for which there are no substitutable domestic products. The instrument was developed in response to an application by Tyres4u, who sought to reduce the duty on their imported tyres from 10% to 0%. The Customs Act 1901 provides a framework under which the Chief Executive Officer of Customs can make such tariff concession orders if certain criteria are met, ensuring that the application does not pertain to goods excluded by section 269SJ of the Act and that there are no substitutable goods produced in Australia. The enactment of this instrument ensures that the policy objective of providing tariff relief for specific imported goods, thereby potentially lowering costs for importers and end-users, is achieved.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). The act applies to individuals or entities seeking a concession on customs duty for goods that are not produced in Australia and for which substitutable goods are not produced domestically in the ordinary course of business. The application process requires the applicant to demonstrate that the goods in question meet the criteria set forth in section 269C of the Act, which mandates that no substitutable goods are produced in Australia on the date the application is lodged. The TCO scheme is a national application with its jurisdiction spanning across Australia, as it is an instrument of the Commonwealth. Notably, the TCO does not apply to goods specified in section 269SJ of the Act, which lists those that cannot be subject to a TCO. The scope of the Act may be further defined through subordinate instruments, although the primary legislation itself delineates the primary conditions and limitations.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0604599 under the Customs Act 1901 (section 269F) allow for the application for a Tariff Concession Order (TCO) by a person in respect of goods, provided that the goods are not specified in section 269SJ. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria set out in sections 269C, 269B, and 269D, and that no substitutable goods were produced in Australia in the ordinary course of business, the CEO must make a written order (section 269P(3)). This TCO declares that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. In the case of TCO No. 0604599, it was made on 5 May 2006, and it applies to certain buses or lorries tyres, which are now subject to a 0% duty rate instead of the general rate of 10%.
The obligations imposed by the Act on the parties or entities it governs include the requirement for a person to apply to the CEO for a TCO (section 269F), and for the CEO to assess the application against the core criteria (sections 269C, 269B, and 269D). The CEO must also ensure that the application is not in respect of goods specified in section 269SJ, and that no substitutable goods were produced in Australia in the ordinary course of business. Additionally, the CEO is obligated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). If no submissions are received, the TCO is taken to have come into force on the day on which the application for the TCO was lodged (subsection 269S(1)).
Breaches of the obligations imposed by the Customs Act 1901 can result in offences, penalties, or civil/criminal consequences. However, the explanatory statement for TCO No. 0604599 does not specify any particular offences, penalties, or consequences for failure to comply with the provisions of the Act or the TCO itself. Generally, failure to comply with the Customs Act could result in various penalties under the relevant sections of the Act, which may include fines or imprisonment, depending on the severity of the breach. The Act provides for maximum penalties for offences, but these are not detailed in the explanatory statement for this specific TCO.