EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706311
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.
Avant Equipment Pty Ltd applied for a TCO in respect of certain front end loaders on 1 May 2007.
Instrument
TCO No 0706311 was made on 20 July 2007. It declares that those certain front end loaders 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. 0706311 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, enacted by the Australian Parliament, established a framework within which Tariff Concession Orders (TCOs) could be implemented by the Chief Executive Officer of Customs (CEO). This legislation was designed to address the need for reducing customs duties on specific goods that were not being produced domestically, thus promoting trade and economic efficiency. In 2007, an instrument was enacted to provide a tariff concession for certain front end loaders, reducing the duty rate from 5% to 0%. This was achieved through Tariff Concession Instrument No. 0706311, which came into effect on the date the application was lodged, 1 May 2007, and declared these goods to be subject to a specific item in the Customs Tariff Act 1995. The policy objective, as per the Act, was to ensure that the tariff concessions do not disadvantage any person and to allow for duty refunds for importers of such goods.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the procedure for issuing Tariff Concession Orders (TCOs) which provide reduced customs duty rates on certain goods. This Act applies to individuals or entities seeking to import goods that are not produced in Australia in the ordinary course of business, as determined by the Chief Executive Officer of Customs (CEO). The Act's jurisdiction extends across Australia, administered at the federal level, with the CEO having the authority to make decisions regarding TCOs. The application process for a TCO involves meeting core criteria such as the absence of substitutable goods produced in Australia. Notably, certain goods specified in section 269SJ of the Act are ineligible for TCOs. TCOs can be subject to further regulation through subordinate instruments, ensuring flexibility in application and enforcement. The TCO No. 0706311, made on 20 July 2007, applied a zero percent duty rate to certain front-end loaders previously subject to a 5% duty, reflecting the absence of substitutable goods in Australia. This concession took effect from 1 May 2007, the date the application was lodged, and does not affect existing rights or impose new liabilities on parties other than the Commonwealth.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0706311, as referenced in the Customs Act 1901, involve the application and approval process for Tariff Concession Orders (TCOs). Specifically, section 269F allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO, while section 269C outlines the core criteria for approval. If the CEO is satisfied that the application meets these criteria, they are mandated under section 269P(3) to issue a written order declaring the goods subject to the TCO and specifying the reduced duty rate.
Under the Act, the CEO has a duty to assess the application against the core criteria, ensuring that the goods in question are not substitutable by Australian-produced items and meet the definition of 'goods produced in Australia' as defined in section 269D, and 'ordinary course of business' as per section 269E. Once a TCO is issued, the goods are subject to a specified lower rate of customs duty, as outlined in the order. In this instance, the general rate of duty on the front-end loaders is reduced to 0% under item 50 of Schedule 4 to the Tariff.
Entities and individuals governed by this Act, particularly those seeking a TCO, must ensure their applications are made in accordance with section 269F and meet the criteria set out in section 269C. This includes demonstrating that no substitutable goods are produced in Australia and providing sufficient evidence to support the application. Additionally, the CEO is required to publish a notice in the Gazette under subsection 269K(1), inviting submissions from any interested parties. In this case, no submissions were received.
Should a TCO be breached, the consequences can be significant. While the Act does not explicitly outline offences or penalties for non-compliance with a TCO, any breach of the Customs Act 1901 could lead to civil or criminal penalties. These may include fines, imprisonment, or other sanctions as prescribed by law for violations of customs regulations. The specifics of any penalties would depend on the nature and severity of the breach.