EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703392
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.
Komatsu Australia Pty Ltd applied for a TCO in respect of certain mechanical shovel parts on 01 March 2007.
Instrument
TCO No 0703392 was made on 18 May 2007. It declares that those certain mechanical shovel 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 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. 0703392 is taken to have come into force on 01 March 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, establishes a framework for the regulation of imports and exports, including the imposition of customs duties. A notable feature of this Act is the ability to grant tariff concession orders (TCOs) which can provide relief from customs duties on certain goods. This scheme is outlined in Part XVA of the Act and enables the Chief Executive Officer of Customs to issue TCOs when specific criteria are met, notably when no substitutable goods are produced in Australia. The primary purpose of TCOs is to facilitate trade by reducing the cost of imported goods, thus promoting economic efficiency and competitiveness. The instrument F2007L01490, specifically TCO No. 0703392, was introduced on 18 May 2007 to provide duty-free status on certain mechanical shovel parts following an application by Komatsu Australia Pty Ltd. The decision to grant the concession was made after it was determined that no substitutable goods were produced domestically, thereby meeting the core criteria outlined in the Act. This legislative instrument aims to support Australian businesses by lowering their costs and enhancing their competitiveness without adversely affecting the rights of existing parties under the law.
Scope and Application
The Customs Act 1901 applies to all individuals, businesses, and entities involved in the importation of goods into Australia, specifically in relation to the assessment and payment of customs duty. The Act facilitates the application process for Tariff Concession Orders (TCOs) as per Part XVA, allowing for a reduced rate of customs duty on certain goods. The application for a TCO can be initiated by any person, and the Chief Executive Officer of Customs (CEO) is tasked with determining whether the application meets the core criteria, primarily focusing on the absence of substitutable goods produced in Australia. The CEO's decision to issue a TCO is contingent on satisfying these core criteria, which are further defined by specific sections of the Act. The geographic reach of the Act extends to the entire Commonwealth of Australia, and its application is governed by the Customs Tariff Act 1995. Certain goods, as outlined in section 269SJ of the Act, are excluded from TCO consideration. The Act allows for the issuance of subordinate instruments to further refine the application and enforcement of TCOs.
Key Provisions
The Customs Act 1901, particularly under Part XVA, outlines the framework for Tariff Concession Orders (TCOs) which are instrumental in applying lower rates of customs duty to specified goods. When an applicant, such as Komatsu Australia Pty Ltd, submits an application for a TCO under section 269F, the Chief Executive Officer of Customs (CEO) evaluates the application to ensure it meets the core criteria set out in section 269C. This evaluation requires, among other things, that no substitutable goods were produced in Australia on the day the application was lodged, as defined under sections 269D and 269E. Once these criteria are met, the CEO issues a written order, a TCO, specifying that the goods in question are subject to a prescribed rate of duty, in this case, free of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations placed on parties under this Act are primarily on the CEO of Customs. Upon receiving a valid TCO application, the CEO must promptly publish a notice in the Gazette, inviting any interested parties to submit their views on whether the TCO should proceed (subsection 269K(1)). This ensures transparency and provides an opportunity for objections to be raised. The CEO must also ensure that the TCO does not disadvantage any person or impose new liabilities for actions taken before the TCO's effective date.
The Act delineates specific consequences for non-compliance with its provisions. While the explanatory statement does not specify criminal penalties, it is clear that failure to adhere to the outlined processes or acting in contravention of the TCO could result in civil consequences. For instance, any party that imports goods under the mistaken belief that a TCO has been wrongly approved may face liability for duties owed, potentially leading to financial penalties. Furthermore, any misuse of the TCO process or deliberate circumvention of the requirements could lead to further scrutiny and potential administrative actions by customs authorities.