EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616187
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.
Clark Equipment Sales Pty Ltd applied for a TCO in respect of certain forklift trucks on 28 August 2006.
Instrument
TCO No 0616187 was made on 5 January 2007. It declares that those certain forklift trucks 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 receive one submission in response to this invitation from Crown Equipment Pty Ltd.
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. 0616187 is taken to have come into force on 28 August 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 provide for the administration of the revenue laws of the Commonwealth and includes provisions for the imposition of customs duty on imported goods. The Act was introduced to address the need for a structured framework governing the collection of customs duty and the regulation of imported goods. The Tariff Concession Instrument No. 0616187, enacted by the Commonwealth Parliament, aims to provide a concession on customs duty for specific goods, in this case certain forklift trucks, where no substitutable goods are produced in Australia. This legislative instrument allows the Chief Executive Officer of Customs to reduce the duty rate for these goods from the general rate of 5% to 0%, as long as the application meets the core criteria outlined in the Act. The policy objective is to facilitate trade by reducing the duty burden on certain imported goods, thereby encouraging their importation and potentially benefiting the domestic market by providing more competitive pricing.
Scope and Application
The Tariff Concession Instrument No. 0616187, made under the Customs Act 1901, applies to specific goods, in this case certain forklift trucks, that are subject to a Tariff Concession Order (TCO). The Act allows for the application of a lower rate of customs duty to goods specified in a TCO, provided that certain criteria are met and that the goods are not among those excluded by section 269SJ of the Act. The process involves an application by an interested party, such as Clark Equipment Sales Pty Ltd, to the Chief Executive Officer of Customs, who must then determine if the application meets the core criteria, particularly if no substitutable goods are produced in Australia. If the criteria are met, the CEO issues a TCO, as was done in this instance with the forklift trucks, reducing the duty rate from the general 5% to 0%. The instrument's application is national in scope, extending to all entities involved in the importation of these goods within Australia. The TCO's commencement date aligns with the date of the application, providing immediate tariff relief to importers of the specified forklift trucks. Notably, the TCO does not disadvantage or impose liabilities on any person in respect of actions taken before its registration, although it does confer benefits to importers who may apply for a refund of duties paid on these goods since the effective date.
Key Provisions
Section 269C of the Customs Act 1901 requires that a Tariff Concession Order (TCO) application meets the core criteria, which is met if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This is further defined in section 269D where 'goods produced in Australia' and in section 269E where 'ordinary course of business' is explained. Additionally, section 269B clarifies that 'substitutable goods' are those produced in Australia that could be used in a manner similar to the goods in question. If the Chief Executive Officer of Customs (CEO) determines that these criteria are met, a TCO is made under section 269P(3) of the Act, specifying a lower rate of customs duty for the goods in question.
The Customs Act 1901 imposes specific obligations on the CEO in relation to the processing of TCO applications. Upon receiving an application under section 269F, the CEO must first ensure the application is not in respect of goods specified in section 269SJ, which excludes certain goods from TCO eligibility. Following this, the CEO must evaluate whether the application meets the core criteria specified in section 269C. If satisfied, the CEO is mandated to issue a written order under section 269P(3). Moreover, the CEO must publish a notice in the Gazette under subsection 269K(1) inviting submissions from interested parties regarding the proposed TCO. This process ensures transparency and allows for public input before the TCO is finalised.
Breaching the provisions of the Customs Act 1901 concerning Tariff Concession Orders can lead to various civil and criminal consequences. While the Act does not explicitly state penalties for failing to comply with TCO regulations, breaches of related customs laws can result in significant penalties. Under section 283 of the Customs Act 1901, the maximum penalty for wilful customs offences includes fines up to $22,200 for individuals and $111,000 for corporations, alongside potential imprisonment. Furthermore, the Act provides for the imposition of pecuniary penalties under the Commonwealth’s pecuniary penalties regime, where penalties can be substantial, reflecting the severity of non-compliance.