EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607165
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.
Knorr Bremse Australia Pty Ltd applied for a TCO in respect of certain locomotive door shut off valves on 19 April 2006.
Instrument
TCO No 0607165 was made on 7 July 2006. It declares that those certain locomotive door shut off valves 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 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. 0607165 is taken to have come into force on 19 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, establishes a framework for the application of tariffs and duties on imported goods. The introduction of Tariff Concession Orders (TCO) through Part XVA of the Act aims to address the need for tariff relief on specific goods, providing a mechanism by which the Chief Executive Officer of Customs can grant concessions to lower the customs duty rates on goods that meet certain criteria. This is particularly relevant for goods that do not have substitutable alternatives produced within Australia and where the application for concession is deemed to meet the core criteria outlined in the Act. The policy objective is to facilitate the import of specific goods by reducing financial burdens, thereby encouraging trade and economic activity without disadvantaging existing rights or imposing new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, applicable to goods specified in the order. The instrument in focus, Tariff Concession Instrument No. 0607165, pertains specifically to certain locomotive door shut off valves. The Act applies to entities and individuals who import these specified goods, granting them a concession that reduces the duty from 10% to free. This concession is contingent upon the condition that no substitutable goods are produced in Australia. The instrument was made on 7 July 2006, following an application by Knorr Bremse Australia Pty Ltd, and is effective from 19 April 2006, the date the application was lodged. The application of this TCO does not retroactively affect the rights or liabilities of any person other than the Commonwealth, and it notably benefits importers by allowing them to apply for a refund of duty paid on these goods since the effective date of the concession. No submissions were received in opposition to the TCO during the consultation period.
Key Provisions
The Customs Act 1901 establishes a framework for the creation of Tariff Concession Orders (TCOs) as outlined in Part XVA. Specifically, section 269F allows for applications to the Chief Executive Officer of Customs (CEO) for such orders. If the application is not for goods excluded under section 269SJ and meets the core criteria specified in section 269C, the CEO must issue a TCO. This order applies a reduced rate of customs duty on the specified goods, as stipulated in Schedule 4 of the Customs Tariff Act 1995. The key criteria for approving a TCO, as per section 269C, is that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269D, 269E, and 269F of the Act respectively.
The obligations imposed by the Customs Act 1901 on the parties involved are primarily centred around the application and assessment processes for TCOs. The applicant must ensure their application meets the criteria outlined in section 269C, including providing sufficient evidence that no substitutable goods were produced in Australia. The CEO, upon receiving a valid application, is required to publish a notice in the Gazette inviting submissions from any person who may have an interest in the outcome of the application, as per section 269K(1). If no submissions are received, the CEO must proceed to make the TCO if the application meets the core criteria. The CEO also has a duty to ensure that the rights of existing parties, particularly importers, are not adversely affected by the issuance of a TCO.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs can result in various consequences. The Act does not explicitly outline offences or penalties for breaches related to the issuance of TCOs; however, general provisions within the Customs Act may apply to violations of its terms. Infractions could potentially lead to administrative penalties, including fines or other sanctions as determined by the applicable laws. Additionally, any person adversely affected by an improperly issued TCO may seek redress through the courts, although specific penalties for such breaches are not detailed in the Act.