EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617786
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.
United Group Rail Services Ltd applied for a TCO in respect of certain bogie parts on 19 October 2006.
Instrument
TCO No 0617786 was made on 29 December 2006. It declares that those certain bogie 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. One submission objecting to the TCO application was received from FIP 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. 0617786 is taken to have come into force on 19 October 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 Parliament of Australia, provides for a scheme whereby Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). This scheme addresses the issue of providing relief to importers by allowing for lower rates of customs duty on certain goods. The Act facilitates this through applications for TCOs, which must meet core criteria before being approved. One such instance is TCO No. 0617786, which was made on 29 December 2006, reducing the duty on specific bogie parts from 5% to 0%, effective from the date of the application, 19 October 2006. This order was made after consultation and consideration of objections, ensuring that the rights of all parties were taken into account. The primary policy objective is to support Australian industries by ensuring that concessional tariffs are applied appropriately, fostering a competitive environment for businesses.
Scope and Application
The Customs Act 1901 applies to the process of tariff concession orders concerning customs duty, as outlined in Part XVA of the Act. Specifically, it allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the rate of customs duty on certain goods. These orders apply to any person or entity that can demonstrate that no substitutable goods are produced in Australia in the ordinary course of business, as per the criteria set out in the Act. The application and subsequent decision-making process requires the CEO to consider submissions from interested parties, including any objections to the proposed TCO. The TCOs have a national reach as they apply across all states and territories within Australia. While the Act allows for the creation of TCOs, it also specifies certain goods that cannot be subject to these orders, as listed in section 269SJ. The implementation of a TCO does not retroactively affect the rights of any person and does not impose new liabilities on any party other than the Commonwealth. Instead, it provides benefits to importers by allowing them to apply for refunds of duties on goods imported from the date the TCO comes into force.
Key Provisions
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) under Part XVA, as detailed in sections 269F, 269C, and 269P. According to section 269F, any person can apply to the Chief Executive Officer of Customs (CEO) for a TCO regarding specific goods, provided those goods do not fall under section 269SJ, which lists goods ineligible for TCOs. If the CEO determines that the application meets the core criteria, which are outlined in section 269C, they must issue a written TCO. Section 269B further clarifies that the terms 'goods produced in Australia,' 'ordinary course of business,' and 'substitutable goods' are defined in sections 269D, 269E, and 269F respectively.
The obligations imposed by the Act on the CEO include reviewing the application to ensure it is valid and meets the core criteria. If satisfied, the CEO must make a written TCO and publish a notice in the Gazette, inviting any interested party to lodge a submission if they believe the TCO should not proceed. This process is governed by subsection 269K(1). The Act also stipulates that the TCO comes into force on the date the application is lodged, as per subsection 269S(1). In the case of TCO No. 0617786, this means the concession was effective from 19 October 2006.
While the Act does not explicitly lay out specific civil or criminal penalties for breaches of TCO provisions, any failure to comply with the terms of a TCO could potentially lead to legal consequences under other sections of the Customs Act or related legislation. For instance, non-compliance with customs regulations generally could result in penalties under the Customs Act, which may include fines and imprisonment, depending on the severity and intent behind the breach.
The Tariff Concession Instrument No. 0617786, made on 29 December 2006, exemplifies the process under section 269P(3), where the CEO issued a TCO for certain bogie parts after determining that no substitutable goods were produced in Australia. The general rate of duty for these goods is 5%, but under the TCO, the duty is reduced to 0%. This concession benefits importers by potentially allowing them to apply for duty refunds on goods imported since the TCO's effective date, without imposing any new liabilities on them, as per the Regulations under paragraph 126(1)(r).