EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617221
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.
Bradken Rail applied for a TCO in respect of certain body bolster or transom parts on 3 November 2006.
Instrument
TCO No 0617221 was made on 19 January 2007. It declares that those certain body bolster or transom parts 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. 0617221 is taken to have come into force on 3 November 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 amended to include Part XVA, which allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Enacted by the Australian Parliament, this part of the Act was introduced to address the need for a streamlined process to grant tariff concessions on specific goods, facilitating smoother import processes and potentially boosting economic activity by reducing the cost of imported goods. The policy objective of this legislative addition is to ensure that certain goods, which are not produced domestically in a substitutable form, receive a reduced customs duty rate, thus encouraging the import of these goods and potentially benefiting consumers and businesses. The CEO is mandated to consider applications for TCOs and to make orders if the core criteria are met, ensuring that the process is both transparent and responsive to the needs of the import sector.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the framework for Tariff Concession Orders (TCOs) which are made by the Chief Executive Officer of Customs (CEO). The legislation applies to any person who may apply for a TCO in respect of goods, provided these goods are not specified in section 269SJ, which excludes certain goods from eligibility. A TCO application is considered if it meets the core criteria, notably if no substitutable goods are produced in Australia in the ordinary course of business as per sections 269C and 269D. This instrument, TCO No. 0617221, pertains to specific body bolster or transom parts for which the general rate of customs duty is reduced from 5% to 0%. The CEO must ensure the application is published in the Gazette, inviting objections which, in this case, did not occur. The TCO is effective from the date the application was lodged, which for this instance, was 3 November 2006, without retroactive disadvantage or imposition of liabilities on persons other than the Commonwealth. Importers stand to benefit from this concession, including the ability to apply for duty refunds on imports from the effective date of the TCO.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0617221, under the Customs Act 1901 (section 269F), require the Chief Executive Officer of Customs (the CEO) to assess applications for Tariff Concession Orders (TCOs). If the application for a TCO pertains to goods not listed in section 269SJ, which specifies goods that cannot be subject to a TCO, the CEO must then determine whether the application meets the core criteria as outlined in section 269C. This involves verifying that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D, 269E, and 269F. If satisfied, the CEO must issue a written TCO order, as stipulated in section 269P(3), which declares that the specified goods are subject to a lower rate of customs duty, such as the 0% rate applied to certain body bolster or transom parts in this case.
The obligations imposed by the Act on parties or entities it governs are primarily centred on the application process for TCOs. An applicant, such as Bradken Rail in this instance, must ensure their application is for goods not excluded by section 269SJ and meets the criteria of section 269C. Additionally, the CEO is obligated to assess the application promptly, publish a notice in the Gazette inviting objections (section 269K(1)), and, if no objections are received, to make a TCO. The CEO also has the responsibility to ensure that the TCO does not disadvantage any person or impose liabilities on them for actions taken prior to the TCO’s effective date, as per section 269S(1).
In terms of offences, penalties, or consequences for breach, the Act does not explicitly detail specific penalties for failing to comply with the TCO process or for incorrect applications. However, any failure to comply with the terms and conditions of a TCO, or any fraudulent application, could potentially result in civil or criminal liability under the broader Customs Act 1901. Such breaches might lead to penalties including fines or imprisonment, depending on the nature and severity of the breach. The exact penalties would be determined by the courts based on the relevant provisions of the Customs Act and other applicable laws.