EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618478
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.
Queensland Rail applied for a TCO in respect of certain main transformers on 13 November 2006.
Instrument
TCO No 0618478 was made on 2 February 2007. It declares that those certain main transformers 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. 0618478 is taken to have come into force on 13 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, enacted by the Commonwealth Parliament, establishes a framework for tariff concessions through Tariff Concession Orders (TCOs). The problem or gap this Act addresses is the need for a mechanism to allow for reduced customs duties on certain goods, ensuring they are accessible without being prohibitively expensive due to high duty rates. The Act aims to provide a structured process whereby the Chief Executive Officer of Customs can assess and approve applications for tariff concessions, facilitating trade by making specific goods more affordable. This legislative framework supports the policy objective of promoting efficient and competitive trade by reducing the financial burden on businesses and consumers for certain imported goods. The explanatory statement for Tariff Concession Instrument No. 0618478, which was made on 2 February 2007, demonstrates this process by detailing how Queensland Rail's application for tariff concessions on certain main transformers was assessed and approved, effectively reducing the duty rate from 5% to 0%.
Scope and Application
The Tariff Concession Instrument No. 0618478 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO) and is administered by the Chief Executive Officer of Customs. Specifically, the legislation applies to entities or individuals who have applied for a TCO, and who meet the core criteria set out in the Act. These criteria include the absence of substitutable goods produced in Australia on the day the application was lodged. The geographic reach of this Act is national, as it pertains to customs duties across Australia. However, the application of TCOs is limited to goods not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. Furthermore, the application process involves publishing a notice in the Gazette, inviting submissions from interested parties, although no submissions were received in response to this particular TCO application. The Act also ensures that the TCO does not disadvantage or impose liabilities on any person in respect of actions taken before the date of registration, while allowing importers to apply for duty refunds for goods imported since the TCO came into force.
Key Provisions
The Customs Act 1901 includes provisions that allow for the creation of Tariff Concession Orders (TCOs) through Part XVA (sections 269C to 269SJ). Under section 269F, any person can apply to the Chief Executive Officer (CEO) of Customs for a TCO regarding specific goods. If the application pertains to goods not excluded under section 269SJ, the CEO must assess if it meets the core criteria outlined in section 269C, which requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the application meets these criteria, the CEO is required to issue a written order under section 269P(3), declaring that the goods in question are subject to a prescribed tariff item specified in the order. In the case of TCO No. 0618478, the CEO determined that certain main transformers were eligible for a TCO since no substitutable goods were produced in Australia at the time of the application. As a result, the TCO declares that these transformers are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, reducing the duty rate from 5% to 0%.
Entities subject to the Customs Act 1901 and its regulations, including applicants for TCOs, must adhere to specific obligations. For applicants, this means ensuring that their applications meet the core criteria outlined in section 269C, particularly the requirement that no substitutable goods were produced in Australia at the time of the application. The CEO must also fulfil the obligation under section 269K(1) to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted. Additionally, the TCO itself must be registered and published to take effect from the date the application was lodged, as stipulated in section 269S(1). The Act ensures that the TCO does not disadvantage any person other than the Commonwealth or impose liabilities on any person for actions taken before the TCO was registered.
In the event of a breach of the provisions under the Customs Act 1901 or its regulations, several consequences may arise. While the explanatory statement does not detail specific offences, penalties, or consequences for breaching the Act in the context of TCOs, it is known that the Act generally provides for both civil and criminal penalties. Civil penalties may include fines, while criminal penalties could involve imprisonment, depending on the severity and nature of the breach. The maximum penalties for breaches would typically be outlined in relevant sections of the Customs Act 1901 or associated regulations, but these specifics are not provided in the explanatory statement. However, it is clear that compliance with the Act and its regulations is crucial to avoid any legal repercussions.