EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0701720
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.
Gilbert Group Qld Pty Ltd applied for a TCO in respect of certain rock breakers on 1 February 2007.
Instrument
TCO No 0701720 was made on 20 April 2007. It declares that those certain rock breakers 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. 0701720 is taken to have come into force on 1 February 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 Tariff Concession Instrument No. 0701720, enacted on 20 April 2007, is a legislative measure introduced under the Customs Act 1901 to address the need for tariff concessions for specific imported goods. This instrument was created to facilitate the application of lower customs duty rates for certain rock breakers, as requested by Gilbert Group Qld Pty Ltd on 1 February 2007. The instrument was made by the Chief Executive Officer of Customs following satisfaction that no substitutable goods were produced in Australia, thus meeting the core criteria stipulated in section 269C of the Act. As a result, the instrument declares that the rock breakers in question are subject to a 0% customs duty rate, down from the general rate of 5%.
The enactment of this instrument by the CEO, in accordance with section 269P(3) of the Customs Act 1901, ensures that the rights of importers are beneficially affected while not imposing any liabilities on persons other than the Commonwealth. This measure was implemented to provide tariff concessions without disadvantaging or imposing liabilities on any person, thereby fostering a conducive environment for the import of specified goods. The instrument came into force on 1 February 2007, the date of the application, as per subsection 269S(1) of the Customs Act 1901.
Scope and Application
The Customs Act 1901, through Part XVA, allows for the creation of Tariff Concession Orders (TCOs) which reduce the customs duty on specified goods. This provision applies to any person who may apply to the Chief Executive Officer of Customs (CEO) for such a concession, provided the goods in question do not fall under the restricted categories outlined in section 269SJ of the Act. A TCO is applicable if, on the date of application, there are no substitutable goods produced in Australia in the ordinary course of business. The CEO must ensure that the application meets these criteria before proceeding to issue a TCO. For example, in the case of TCO No. 0701720, certain rock breakers were granted a tariff concession reducing the duty rate from 5% to 0%. This concession is effective from the date the application was lodged, 1 February 2007, and does not impose any liabilities or disadvantage any party other than the Commonwealth. The CEO is required to publish a notice of the TCO application in the Gazette, inviting submissions from any interested parties, although no submissions were received in this case. The TCOs are subject to the Customs Tariff Act 1995 and may be further refined or extended through subordinate instruments, allowing for detailed regulation and administration of tariff concessions.
Key Provisions
The primary operative sections of this legislation (sections 269C, 269F, 269P(3) and 269SJ) establish a framework for the making of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO concerning specific goods. If the CEO is satisfied that the application is valid and does not pertain to goods specified in section 269SJ, which outlines the types of goods that cannot be subject to a TCO, the CEO must assess whether the application meets the core criteria outlined in section 269C. If these criteria are met, the CEO must make a written order (a TCO) that declares the goods in question as subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a lower rate of customs duty.
The Act imposes several obligations and requirements on the parties involved. Firstly, applicants for a TCO must ensure their application meets the core criteria, specifically that no substitutable goods are produced in Australia on the day the application is lodged. The CEO is obligated to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. Additionally, the CEO must make the TCO if the application meets the core criteria. Once a TCO is made, it benefits importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force.
In terms of potential breaches and consequences, section 269K(1) mandates that the CEO must invite submissions regarding the TCO application. If an applicant fails to adhere to the requirements for making a TCO application, the CEO is not obligated to process the application, which could lead to the applicant not receiving the desired tariff concession. However, the Act does not specify any criminal or civil penalties for failing to meet the core criteria or other procedural errors in applying for a TCO. The main consequence of a non-compliant application is the potential denial of tariff concessions for the specified goods.