EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0700899
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.
Rio Tinto Tyres Pty Ltd applied for a TCO in respect of certain earthmover tyre tread segments on 16 January 2007.
Instrument
TCO No 0700899 was made on 10 April 2007. It declares that those certain earthmover tyre tread segments 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 10%. The rate of duty for the goods subject to the TCO is free.
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. 0700899 is taken to have come into force on 16 January 2007.
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, includes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This scheme allows for lower rates of customs duty on certain goods, provided they meet specific criteria outlined in the Act. One such concession, Tariff Concession Instrument No. 0700899, was introduced to address the issue of certain earthmover tyre tread segments not being produced in Australia, thereby qualifying them for a tariff concession. The policy objective here is to facilitate the import of goods that are not locally produced, thus supporting economic efficiency and competitive pricing in the market. The TCO, effective from 16 January 2007, ensures that these specific tyre tread segments are subject to a zero rate of duty, differing from the general rate of 10%.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This Act applies to entities and individuals involved in the importation of goods that are the subject of a TCO application. The primary focus is on the importation of goods that are not produced in Australia and for which no substitutable goods are produced domestically. The legislation provides a framework for granting tariff concessions, effectively reducing customs duties on specified goods when certain criteria are met. This reduction benefits importers by lowering the cost of importing these goods. The scope of this Act extends to the Commonwealth level, ensuring uniform application of tariff concessions across Australia. The Act excludes certain goods specified in section 269SJ that are ineligible for tariff concessions. The CEO is mandated to publish notices in the Gazette to invite submissions on TCO applications, although in the case of TCO No. 0700899, no objections were raised. The TCO comes into effect on the date of the application lodgement and does not disadvantage existing rights or impose new liabilities on importers prior to the concession's registration.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0700899 are sections 269C, 269F, and 269P(3) of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. If the application meets the core criteria specified in section 269C, the CEO must make a written order (a TCO) declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269P(3) stipulates that the CEO must make the TCO if satisfied that the application meets the core criteria. This particular TCO (No. 0700899) was made on 10 April 2007, declaring that certain earthmover tyre tread segments are goods to which item 50 of Schedule 4 applies, resulting in a tariff concession from the general rate of 10% to free.
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily centred around the application and approval process for a Tariff Concession Order. The CEO must determine whether an application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged. Substitutable goods, as defined in section 269D of the Act, are those that can be put to a use corresponding to the goods subject of the application. Once an application is accepted, the CEO must publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made. The CEO must also ensure that the rights of a person (other than the Commonwealth) as at the date of registration are not adversely affected by the TCO. This is particularly relevant for importers who may benefit from the tariff concession and can apply for a refund of duty on goods imported since the TCO is deemed to have come into force.
Under the Customs Act 1901, breaches of the provisions related to Tariff Concession Orders can lead to civil or criminal consequences. Although the specific offences, penalties, or consequences are not detailed in the explanatory statement, the general legal framework suggests that non-compliance with the Act’s requirements could result in penalties. For instance, providing false information in an application for a TCO could lead to civil penalties or criminal charges, depending on the severity and intent behind the breach. The maximum penalties for such offences would be determined by the relevant sections of the Customs Act and the severity of the offence. It is essential for applicants and the CEO to adhere to the legal requirements to avoid any potential legal ramifications.