EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606955
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.
Onesteel Manufacturing Pty Ltd applied for a TCO in respect of certain displacement pumps on 11 April 2006.
Instrument
TCO No 0606955 was made on 7 July 2006. It declares that those certain displacement pumps 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. 0606955 is taken to have come into force on 11 April 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 regulation of customs and border control, including the imposition of customs duty on imported goods. To address specific economic needs and to encourage certain industries, the Act allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders can reduce or eliminate customs duty on specified goods, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. Onesteel Manufacturing Pty Ltd applied for such a concession in relation to certain displacement pumps, resulting in TCO No. 0606955. This order, which came into force on the date of application, 11 April 2006, sets the duty rate at 0% for these goods, down from the general rate of 5%. The policy objective is to support the industry by reducing costs and potentially increasing competitiveness, without disadvantaging existing rights or imposing new liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs), applies to goods specified in an application for tariff concession, provided that the application meets the core criteria stipulated in the Act. This scheme is designed to offer lower customs duty rates on goods that are not substitutable by goods produced in Australia in the ordinary course of business. The Act directly applies to individuals or entities seeking tariff concessions for specific goods, which in this case was Onesteel Manufacturing Pty Ltd for certain displacement pumps. The geographic and jurisdictional reach of this legislation is national, as it pertains to the Commonwealth of Australia. Notably, the Act does not impose liabilities on any person and ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into effect. However, it excludes goods specified in section 269SJ of the Act that cannot be subject to a TCO. The application of this Act can be extended or restricted through subordinate instruments, as evidenced by TCO No. 0606955 which was made under this authority.
Key Provisions
The primary operative sections of this legislation, specifically F2006L02329, concern the establishment of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). The Act allows for a lower rate of customs duty on goods that are the subject of a TCO. When a TCO application is lodged, the Chief Executive Officer of Customs (CEO) must determine if the application meets the core criteria, as outlined in section 269C. This involves assessing whether there are any substitutable goods produced in Australia that could replace the goods in question, which is defined in section 269D as 'goods produced in Australia' and section 269E as 'ordinary course of business'. If the CEO is satisfied that the application meets these criteria, they must make a written order that declares the goods subject to the TCO and specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods.
The Act imposes several obligations on the parties involved. Firstly, any person who wishes to apply for a TCO must ensure their application is lodged under section 269F and does not pertain to goods listed in section 269SJ, which are ineligible for TCOs. The CEO has the duty, under section 269K, to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, and to consider these submissions before making a decision. In the case of TCO No. 0606955, the CEO published such a notice but did not receive any submissions. Furthermore, section 269S(1) mandates that a TCO comes into effect on the day the application is lodged, which in this case was 11 April 2006.
In terms of penalties and consequences for breach, the Customs Act 1901 does not specify particular offences or penalties directly related to the failure to comply with TCO provisions. However, any breach of the conditions or misrepresentation in the application process could potentially lead to civil or criminal consequences under the broader Customs Act, which includes provisions for penalties, fines, and imprisonment for serious breaches. For instance, under section 247 of the Act, an offence involving fraud or misrepresentation can result in a penalty of up to 10 years imprisonment. Additionally, section 251 of the Act allows for the imposition of financial penalties for breaches of the Act, which can be significant depending on the nature and severity of the offence.