EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616833
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.
Cummins Diesel Australia applied for a TCO in respect of certain AC electric generators on 7 September 2006.
Instrument
TCO No 0616833 was made on 1 December 2006. It declares that those certain AC electric generators 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. 0616833 is taken to have come into force on 7 September 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 regulatory framework for the administration of customs and excise duties. Part XVA of the Act provides the mechanism for Tariff Concession Orders (TCOs) which allow for reduced customs duty rates on specified goods. This legislative framework was introduced to address the need for tariff concessions that can stimulate economic activity by making imported goods more competitively priced against locally produced substitutes. Tariff Concession Instrument No. 0616833, made under the authority of the Customs Act, was introduced on 1 December 2006, in response to an application by Cummins Diesel Australia for a TCO on certain AC electric generators. The application was successful as no substitutable goods were produced in Australia at the time, leading to the concession of a 0% duty rate on these generators, down from the standard 5%. The policy objective of this instrument is to support the importation of specific goods by reducing their duty rates, thereby encouraging economic efficiency and consumer choice.
Scope and Application
The Customs Act 1901, as amended, includes a provision under Part XVA that allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. This legislation applies to any person or entity that applies for a TCO in respect of goods not specified in section 269SJ of the Act, which outlines the goods ineligible for a TCO. The application process requires the CEO to assess whether the application meets the core criteria, particularly whether no substitutable goods were produced in Australia in the ordinary course of business at the time of application. Once a TCO is made, it alters the duty rate for the specified goods, as demonstrated by Tariff Concession Instrument No. 0616833, which applies a 0% duty rate to certain AC electric generators, down from the general rate of 5%. The Act extends its application nationally across Australia and does not disadvantage any person other than the Commonwealth, nor does it impose liabilities for actions prior to the TCO's registration. The scope of the Act can be further refined through subordinate instruments, which may specify additional criteria or details regarding TCO applications.
Key Provisions
The Tariff Concession Instrument No. 0616833 under the Customs Act 1901 (section 269F) sets forth a significant provision regarding the application for a Tariff Concession Order (TCO) for specific goods. A person can apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning goods if the application does not pertain to goods specified in section 269SJ of the Act. For example, in this case, Cummins Diesel Australia applied for a TCO concerning certain AC electric generators on 7 September 2006. The CEO is required to decide whether the application meets the core criteria set out in section 269C, which stipulates that a TCO application meets these criteria if no substitutable goods were produced in Australia on the day the application was lodged.
Upon the CEO's satisfaction that a TCO application meets the core criteria, section 269P(3) mandates the CEO to issue a written order, declaring the goods to which the TCO applies. This was illustrated in TCO No. 0616833, which was made on 1 December 2006, declaring that certain AC electric generators are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies. This TCO specified that the rate of duty on these goods, which is generally 5%, is reduced to 0%.
Entities or individuals governed by this Act are obligated to ensure their applications for a TCO comply with the core criteria specified in section 269C. Moreover, section 269K(1) requires the CEO to publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not be made. In this instance, the CEO did not receive any submissions. Additionally, the TCO, once made, does not affect the rights of a person as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken before the registration date.
In terms of consequences, any breach of the provisions outlined in the Act could result in various civil or criminal penalties, depending on the nature and severity of the breach. The specific penalties are not detailed within the explanatory statement provided, but under the Customs Act 1901, breaches could potentially incur fines or imprisonment, as well as other civil penalties. These consequences underscore the importance of compliance with the Act's provisions for all entities involved.