EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706301
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.
Carba-Tec Pty Ltd applied for a TCO in respect of certain woodworking machines on 1 May 2007.
Instrument
TCO No 0706301 was made on 13 July 2007. It declares that those certain woodworking machines 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. 0706301 is taken to have come into force on 1 May 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 was enacted to provide a framework for the administration of customs and excise duties in Australia, among other things. The Act was introduced to address the need for a structured system of customs and excise duties to regulate the import and export of goods, thereby ensuring compliance with national economic and trade policies. The Tariff Concession Instrument No. 0706301, introduced by the Chief Executive Officer of Customs under the authority conferred by the Customs Act 1901, aims to provide tariff concessions for specific goods, thereby facilitating trade and potentially reducing costs for importers. This instrument was created following an application by Carba-Tec Pty Ltd for tariff concessions on certain woodworking machines, where it was determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria for a concession. The instrument, which came into force on 1 May 2007, lowers the duty rate from 5% to 0%, benefiting importers of these machines.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to specific goods, reducing the rate of customs duty for those goods as outlined in Schedule 4 to the Customs Tariff Act 1995. A TCO can be applied for by any person, provided the goods in question are not specified in section 269SJ of the Act as ineligible for tariff concessions. The CEO evaluates the application based on whether the goods are substitutable by any produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If the application meets the core criteria set out in section 269C, a TCO is issued, as seen in the case of Carba-Tec Pty Ltd’s application for certain woodworking machines, which led to TCO No. 0706301 with a 0% duty rate effective from 1 May 2007. The Act also mandates consultation by publishing notices in the Gazette, although in this instance, no submissions were received. The TCO does not affect existing rights or impose new liabilities, but it does entitle importers to apply for refunds on duty paid before the TCO's effective date.
Key Provisions
The key operative sections of this legislation, specifically Tariff Concession Order No. 0706301 under the Customs Act 1901, include sections 269F, 269C, 269P, and 269S. Section 269F permits an application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. The CEO, upon satisfaction that the application is not in respect of goods specified in section 269SJ, must assess whether the application meets the core criteria as outlined in section 269C. If the application meets these criteria, the CEO is required under section 269P(3) to issue a written TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
The Act imposes several obligations on the parties it governs. The CEO must ensure that any application for a TCO is not in respect of goods prohibited under section 269SJ. The CEO must also verify that no substitutable goods were produced in Australia in the ordinary course of business, as per section 269C. This verification is crucial in determining the eligibility of the goods for a TCO. Furthermore, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made, in accordance with subsection 269K(1).
The legislation outlines specific consequences for breaches of its provisions. While the Explanatory Statement does not detail criminal offences, it is clear that non-compliance with the conditions for issuing a TCO could lead to the invalidation of the order. Additionally, the rights of importers will be beneficially affected as they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations. The TCO itself does not impose any liabilities on any person. However, any failure to comply with the requirements for issuing a TCO could result in the order being deemed invalid, thereby affecting the tariff concessions that were intended to be applied.