EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0700924
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.
Powerlift Australia Pty Ltd applied for a TCO in respect of certain forklift parts on 19 January 2007.
Instrument
TCO No 0700924 was made on 13 April 2007. It declares that those certain forklift 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. 0700924 is taken to have come into force on 19 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, provides a framework for the administration of customs and excise duties in Australia. The Act facilitates the granting of tariff concession orders (TCOs) through Part XVA, allowing the Chief Executive Officer of Customs to apply reduced customs duty rates on specific goods under certain conditions. The problem or gap addressed by this legislation is the potential economic disadvantage faced by Australian businesses that cannot produce certain goods domestically, thereby encouraging the importation of these goods while providing a fair trade environment. The objective of this legislation is to promote fair trade practices by allowing the importation of goods that are not produced in Australia, thus ensuring that Australian consumers and businesses have access to competitive prices without disadvantaging local producers. The explanatory statement for Tariff Concession Instrument No. 0700924 indicates that the instrument was introduced to provide a zero percent duty rate on certain forklift parts, as no substitutable goods were produced in Australia on the date of the application, thereby benefiting importers of these goods.
Scope and Application
The Tariff Concession Instrument No. 0700924, made under the Customs Act 1901, applies to the specific goods—certain forklift parts—that were the subject of an application by Powerlift Australia Pty Ltd. The instrument was created to provide a concession on the customs duty rates for these goods, as no substitutable goods were being produced in Australia in the ordinary course of business on the date the application was lodged. This concession means that the forklift parts now benefit from a zero percent customs duty rate, down from the general rate of five percent. The instrument is effective from the date the application was lodged, 19 January 2007, and does not disadvantage any person other than the Commonwealth nor impose any liabilities on any person. It is noteworthy that the instrument does not extend its application to any goods specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. The scope of the concession is limited to the particular goods identified in the application and does not extend to any other goods, unless further orders are made under the authority of the Act.
Key Provisions
The main sections of Tariff Concession Instrument No. 0700924, issued under the Customs Act 1901, revolve around the application and approval process for Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P). A TCO allows for a lower rate of customs duty on certain goods, and the Instrument No. 0700924 specifically applies to certain forklift parts. The instrument was issued after Powerlift Australia Pty Ltd successfully applied for a TCO on these parts, and the Chief Executive Officer of Customs (CEO) determined that no substitutable goods were being produced in Australia (section 269C). The Instrument declares that these forklift parts are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of 0% instead of the general rate of 5%.
The Customs Act 1901 imposes specific obligations on the CEO and applicants in the context of TCOs. The CEO must ensure that the application does not pertain to goods specified in section 269SJ of the Act, which are ineligible for a TCO. The CEO must also determine if the application meets the core criteria set out in section 269C, which includes verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269P(3)). If these criteria are met, the CEO must make a written order declaring that the goods in question are subject to a TCO. Additionally, as per section 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO. In this instance, no objections were received.
Breaching the conditions of a TCO or failing to adhere to the requirements set out in the Customs Act 1901 may result in civil or criminal consequences. While the explanatory statement does not specify particular offences or penalties, the Act itself provides a framework for enforcement. For example, section 234 of the Act outlines various penalties for breaches, which can include fines and imprisonment. The specifics of penalties would depend on the nature and severity of the breach, with the maximum penalties varying according to the particular provisions of the Act that are contravened. The Act also provides for the recovery of any overpaid duties through section 126 of the Customs Regulations 1993, which includes provisions for refunds to importers of goods affected by a TCO.