EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604914
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.
Hyundai Motor Company Australia Pty Ltd applied for a TCO in respect of certain motor vehicle loud speakers on 8 March 2006.
Instrument
TCO No 0604914 was made on 19 May 2006. It declares that those certain motor vehicle loud speakers 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. 0604914 is taken to have come into force on 8 March 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 was enacted to regulate the importation and exportation of goods in Australia and to provide for the collection of customs duties and other charges. One of its provisions allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can provide lower rates of customs duty on specific goods. The Tariff Concession Instrument No. 0604914, issued in 2006, addresses the problem of ensuring that tariff concessions are granted appropriately, considering whether substitutable goods are produced in Australia. This instrument was introduced to provide relief to Hyundai Motor Company Australia Pty Ltd for certain motor vehicle loudspeakers, setting their duty rate to free under the condition that no substitutable goods were produced domestically. The policy objective here is to facilitate trade and support industries by reducing the customs duty on specific imported goods when no equivalent products are being produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0604914 under the Customs Act 1901 applies to specific motor vehicle loudspeakers for which Hyundai Motor Company Australia Pty Ltd applied for tariff concessions. The Act allows for Tariff Concession Orders (TCOs) to be issued by the Chief Executive Officer of Customs, provided certain criteria are met, such as the absence of substitutable goods produced in Australia at the time of the application. This TCO applies to the goods specified in the application and is effective from the date the application was lodged. The instrument ensures that the general rate of duty on these goods, which is 5%, is reduced to free under the prescribed item of Schedule 4 to the Customs Tariff Act 1995. This concession benefits importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force, without imposing any additional liabilities on them. The TCO does not disadvantage any person other than the Commonwealth and does not affect pre-existing rights or impose liabilities for actions taken before the registration date of the TCO.
Key Provisions
The Customs Act 1901, as amended, introduces a scheme through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Section 269F of the Act allows any person to apply to the CEO for a TCO in relation to specified goods. To qualify for a TCO, the goods must not be listed in section 269SJ, which details the types of goods ineligible for tariff concessions. If the CEO determines that the application complies with the core criteria outlined in section 269C, a TCO can be issued. This core criterion is met if, on the day the application was submitted, there were no substitutable goods produced in Australia in the ordinary course of business. The definitions of key terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' are provided in sections 269D, 269E, and 269B respectively.
In issuing a TCO, the CEO is required to make a written order that specifies the goods subject to the order and the applicable item from Schedule 4 of the Customs Tariff Act 1995. For example, Hyundai Motor Company Australia Pty Ltd successfully applied for a TCO for certain motor vehicle loudspeakers, which now benefit from a zero percent duty rate under item 50 of Schedule 4, down from the general 5% rate. The TCO takes effect from the date the application was lodged, as stipulated in subsection 269S(1) of the Act. This ensures that no rights of persons, other than the Commonwealth, are adversely affected by the TCO as of the registration date, and it imposes no liabilities on any person.
Under subsection 269K(1) of the Act, the CEO must promptly publish a notice in the Gazette upon accepting a TCO application as valid. This notice invites any person who believes there are reasons against the TCO to submit their views to the CEO. In the case of TCO No. 0604914, no submissions were received. The rights of importers are positively affected by the TCO, as they can apply for a duty refund on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 and the related regulations could result in various consequences. The Act does not explicitly state the offences, penalties, or civil/criminal consequences for breach; however, general provisions within the Act and associated regulations typically include provisions for penalties and enforcement actions. Such penalties could range from fines to imprisonment, depending on the severity of the breach. The exact penalties would be determined by the courts based on the specific circumstances of each case.