EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706737
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.
Voith Turbo Pty Ltd applied for a TCO in respect of certain locomotive parts on 7 May 2007.
Instrument
TCO No 0706737 was made on 20 July 2007. It declares that those certain locomotive 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. 0706737 is taken to have come into force on 7 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 Tariff Concession Instrument No. 0706737, enacted in 2007 under the Customs Act 1901, addresses the need for tariff concessions to facilitate trade and reduce import costs for specific goods not produced domestically. This instrument was introduced to provide a pathway for businesses to apply for lower customs duty rates on imported goods where no substitutable Australian-made alternatives exist. Administered by the Chief Executive Officer of Customs, the instrument aims to meet the core criteria outlined in the Act, ensuring that the application is valid and that no equivalent goods are produced in Australia. The policy objective is to support economic efficiency by enabling businesses to access competitively priced goods, thereby enhancing their operational capabilities and potentially lowering consumer prices.
The process involves publishing notices in the Gazette to invite submissions and ensuring that the application is not in respect of goods specified as ineligible under section 269SJ of the Act. In this instance, Voith Turbo Pty Ltd successfully applied for tariff concessions on certain locomotive parts, leading to the creation of TCO No. 0706737, which reduced the duty rate from 5% to 0%. The commencement date of this tariff concession is aligned with the date the application was lodged, 7 May 2007, with no adverse effects on the rights of any party prior to the registration.
Scope and Application
The Customs Act 1901 applies to individuals and entities involved in the importation and exportation of goods within Australia, particularly those seeking tariff concessions on specific goods. The Act, through its Part XVA, facilitates the process of applying for Tariff Concession Orders (TCOs) that reduce the customs duty on particular goods. This is managed by the Chief Executive Officer of Customs, who assesses applications against core criteria such as the absence of substitutable goods produced in Australia. The geographic reach of this Act is national, impacting all importers and exporters within the Australian jurisdiction. The Act also specifies exclusions, notably in section 269SJ, which outlines goods that cannot be subject to a TCO. The application of this Act can be extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995, which defines the rates of duty applicable to goods under the TCOs.
Key Provisions
The key operative sections of this legislation include section 269F, which allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). Section 269C sets out the core criteria that a TCO application must meet. If the CEO is satisfied that the application meets these criteria, they must make a written order, a TCO, as per section 269P(3). This order declares that the goods subject to the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. In this specific instance, TCO No. 0706737 declares that certain locomotive parts are subject to item 50 of Schedule 4, resulting in a 0% rate of duty instead of the general rate of 5%.
The Act imposes several obligations on the parties involved. The CEO must decide whether a TCO application meets the core criteria (section 269C) and must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). If the CEO is satisfied that the application meets the core criteria, they must make a written TCO (section 269P(3)). The Act also requires that a TCO does not affect the rights of a person as at the date of registration in a way that disadvantages that person or imposes liabilities on a person in respect of anything done or omitted before the date of registration (subsection 269S(1)).
Breaching the requirements of this Act can lead to various consequences. For instance, if the CEO fails to make a TCO when satisfied that an application meets the core criteria, they may face administrative scrutiny or legal challenges. While the Explanatory Statement does not specify maximum penalties for breaches, it is reasonable to infer that penalties could be severe given the regulatory nature of the Act. Such breaches could potentially result in financial penalties, legal action, or other enforcement measures imposed by the relevant authorities to ensure compliance with the Act's provisions.