EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706456
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.
Patricks Stevedoring Operations 2 Pty Ltd applied for a TCO in respect of certain crane parts on 4 May 2007.
Instrument
TCO No 0706456 was made on 20 July 2007. It declares that those certain crane 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. 0706456 is taken to have come into force on 4 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 Parliament of Australia, established a framework for the imposition of customs duties on imported goods. It introduced the concept of Tariff Concession Orders (TCOs), which allow for reduced rates of customs duty on specified goods under certain conditions. This legislative measure was introduced to address the need for flexibility in customs duty rates to support industries and importers, particularly in cases where Australian production of substitutable goods is not feasible. The Tariff Concession Instrument No. 0706456, made on 20 July 2007, exemplifies this process by granting a concession for certain crane parts, reducing the duty rate from 5% to 0%. This action was taken after assessing that no substitutable goods were produced in Australia at the time of application, thereby meeting the core criteria stipulated in the Act. The policy objective here is to ensure that customs duties do not unduly burden industries reliant on imported goods, thereby fostering economic efficiency and competitiveness.
Scope and Application
The Customs Act 1901 provides a framework for the implementation of Tariff Concession Orders (TCOs) through Part XVA, which allows for the reduction or exemption of customs duty on certain goods. This legislation applies to any individual or entity that seeks to import goods that meet the specified criteria for tariff concessions. The process involves an application to the Chief Executive Officer of Customs (CEO), who determines whether the application complies with the core criteria outlined in the Act, specifically that no substitutable goods are produced in Australia. If the application meets these criteria, the CEO issues a TCO, which specifies a lower rate of duty for the goods in question. The scope of this Act is national, and its application extends across all jurisdictions within Australia. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ, and any TCO does not affect the rights of any person as at the date of registration, ensuring that no one is disadvantaged or incurs new liabilities due to the concessions. The Act also mandates consultation processes, including publishing notices in the Gazette to invite submissions from interested parties, although in this instance, no submissions were received.
Key Provisions
The main operative sections of the Customs Act 1901, as amended by the Tariff Concession Instrument No. 0706456, establish a framework for the creation of Tariff Concession Orders (TCOs) under section 269F (1). A TCO can be applied for by a person in respect of goods, and if the Chief Executive Officer of Customs (CEO) is satisfied that the application is valid and meets the core criteria, they are required to make a written order (section 269C). The TCO specifies that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with a lower rate of customs duty (section 269P(3)). In this case, TCO No. 0706456 specifies that certain crane parts are subject to a duty rate of 0%, down from the general rate of 5%.
The Customs Act imposes certain obligations on the CEO in the administration of TCOs. When an application is received, the CEO must ensure it is not in respect of goods specified in section 269SJ, which cannot be subject to a TCO (section 269F(2)). The CEO must also determine if the application meets the core criteria, which requires that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If the CEO is satisfied that the core criteria are met, they must make a written TCO (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In the case of TCO No. 0706456, no submissions were received.
Under the Customs Act, there are specific consequences for breaches related to the administration of TCOs. Although the explanatory statement does not detail specific offences or penalties, it is implied that non-compliance with the conditions set out in the Act could lead to legal repercussions. The Act ensures that the TCO does not affect the rights of any person other than the Commonwealth as at the date of registration, and it does not impose any liabilities on any person in respect of actions taken before the date of registration (subsection 269S(1)). Importers of the goods in question can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The absence of specific penalties in the explanatory statement suggests that the focus is on ensuring the smooth application and benefit of the tariff concession, rather than punitive measures for breaches.