EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0605851
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.
Siemens Ltd applied for a TCO in respect of certain generator parts on 29 March 2006.
Instrument
TCO No 0605851 was made on 23 June 2006. It declares that those certain generator 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 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. 0605851 is taken to have come into force on 29 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, enacted by the Parliament of Australia, provides a framework for the imposition of customs duties on imported goods. This Act was supplemented by Tariff Concession Orders (TCOs), which can lower the duty rates on certain goods. The Tariff Concession Instrument No. 0605851, introduced in 2006, aimed to address the gap in duty concessions for specific imported goods by reducing the duty on certain generator parts from the general rate of 10% to 0%. This was achieved by recognising that no substitutable goods were produced in Australia, thereby satisfying the core criteria for a TCO as stipulated in section 269C of the Act. The policy objective was to provide tariff relief to importers of these specific goods, facilitating a reduction in their import costs and potentially stimulating market competition and consumer benefits.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for specific goods. This mechanism allows for the application of a lower rate of customs duty on goods that are the subject of a TCO, provided certain criteria are met. The Act applies to any person or entity that applies for a TCO in relation to goods that are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The CEO's decision to grant a TCO is contingent on the application meeting the core criteria outlined in sections 269C, 269D, and 269E of the Act, particularly focusing on the absence of substitutable goods produced in Australia. Once a TCO application is deemed to meet these criteria, the CEO issues a written order, as specified in section 269P(3), effectively reducing the customs duty rate on the goods. The TCO's jurisdictional reach is governed by the Commonwealth, with its application extending to all entities and individuals involved in the importation of goods affected by the order. However, the rights of persons other than the Commonwealth are preserved as per subsection 269S(1) of the Act, ensuring no retroactive disadvantages or liabilities are imposed.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269P, and 269S, among others. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of certain goods, provided that the goods are not specified in section 269SJ of the Customs Act 1901, which lists those goods that cannot be subject to a TCO. Section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these core criteria, they must make a TCO, as outlined in section 269P(3). Section 269S details the commencement of the TCO, stating that it comes into force on the day the application for the TCO was lodged.
The Act imposes several obligations and requirements on the parties it governs. For example, the CEO of Customs must accept a TCO application as valid and publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made. In this case, the CEO did not receive any submissions in response to this invitation. Moreover, if the CEO decides to make a TCO, they must do so in writing, 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 applies. Additionally, the TCO must not affect the rights of any person (other than the Commonwealth) as at the date of registration, so as to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration.
The legislation also outlines various offences, penalties, or civil/criminal consequences for breach, although specific maximum penalties are not stated in the text. In general, any breach of the Customs Act 1901 or the associated regulations may result in civil or criminal penalties. For example, knowingly making a false statement or representation in relation to an application for a TCO could lead to criminal charges, while failure to comply with the Act or regulations could result in civil penalties, such as fines. The specific penalties for these offences would be determined by the courts based on the circumstances of each case and in accordance with the applicable laws.