EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616835
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 0616835 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. 0616835 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 Tariff Concession Instrument No. 0616835, enacted in 2006, is an instrument under the Customs Act 1901 designed to facilitate tariff concessions for specific goods. The Customs Act 1901 provides a framework for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) which apply lower rates of customs duty on certain goods. The primary issue addressed by this instrument is to provide tariff relief for goods for which there are no substitutable alternatives produced in Australia, thereby promoting the importation of these goods and potentially benefiting consumers and businesses. The instrument was introduced by the Parliament of Australia with the policy objective of providing tariff relief for goods that are not produced in Australia, thus ensuring a fair and competitive market. The instrument came into effect on 7 September 2006, the date the application was lodged, and does not disadvantage any existing parties or impose new liabilities.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at granting preferential rates of customs duty on specific goods. These orders are applicable to goods that meet the criteria set out in the Act, including the absence of substitutable goods produced in Australia at the time of application. The application process is initiated by a person, who must ensure that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Upon satisfying the core criteria, the CEO is mandated to issue a TCO, reducing the customs duty on the specified goods. The application of TCO No. 0616835, for example, concerns certain AC electric generators, where the duty rate is reduced from 5% to 0%. This legislative mechanism does not affect pre-existing rights or liabilities of any party other than the Commonwealth, thereby protecting the interests of individuals and entities not associated with the Commonwealth from any disadvantage or imposition of liabilities arising from the TCO.
Key Provisions
The main operative sections of this legislation focus on Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269C (1) outlines the core criteria that a TCO application must meet, which is that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B and 269D provide definitions of terms such as ‘goods produced in Australia’ and ‘ordinary course of business’. Section 269P(3) mandates that if the Chief Executive Officer (CEO) is satisfied that the application meets the core criteria, a TCO must be made. This particular TCO, No. 0616835, was made on 1 December 2006 and applies to certain AC electric generators, reducing the duty rate from 5% to 0%.
Under the Customs Act 1901, the CEO is obligated to process applications for TCOs and determine whether they meet the core criteria. If the application is valid and meets the criteria, the CEO must issue a written TCO. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who may have objections to the TCO being made. In this instance, no submissions were received. Additionally, section 269S(1) ensures that a TCO is considered to have come into force on the date the application was lodged, which in this case was 7 September 2006. The rights of importers are positively affected by this TCO, as they can apply for a refund of duty on goods imported since the effective date.
The legislation also sets out the consequences for non-compliance. While specific offences are not detailed in the explanatory statement, failure to comply with the requirements of a TCO could potentially lead to civil or criminal penalties under the Customs Act 1901. For example, incorrect declaration of goods or fraudulent claims for tariff concessions could result in fines or imprisonment. The maximum penalties for such offences can be significant, depending on the nature and severity of the breach. Importers who do not adhere to the terms of the TCO or attempt to evade duties may face legal action, including fines and potential imprisonment.