EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707613
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.
W W Wedderburn Pty Ltd applied for a TCO in respect of certain crane scales on 22 May 2007.
Instrument
TCO No 0707613 was made on 27 July 2007. It declares that those certain crane scales 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. 0707613 is taken to have come into force on 22 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, introduced a scheme to allow for the application of lower rates of customs duty on certain goods through Tariff Concession Orders (TCOs). This scheme was designed to address the problem of ensuring that Australian industries remain competitive by allowing for reduced tariff rates on goods for which there are no domestic substitutes. Under the Act, the Chief Executive Officer of Customs is responsible for deciding whether to grant a TCO based on the core criteria set out in the legislation, specifically that no substitutable goods are produced in Australia in the ordinary course of business. The objective of this process is to protect Australian industries from the potential disadvantages of domestic competition and to encourage the efficient use of resources.
The Tariff Concession Instrument No. 0707613, issued on 27 July 2007, exemplifies the application of this scheme. In this case, W W Wedderburn Pty Ltd applied for a TCO for certain crane scales, which was granted as the CEO determined that no substitutable goods were produced in Australia. This concession resulted in a reduction of the duty rate from 5% to 0% for the specified goods, effective from 22 May 2007. The process included a consultation period where no objections were received, and the rights of importers were safeguarded, allowing them to apply for duty refunds on imports made since the TCO came into effect.
Scope and Application
The Tariff Concession Instrument No. 0707613, made under the Customs Act 1901, applies to the specific category of goods, namely certain crane scales, for which W W Wedderburn Pty Ltd submitted an application to the Chief Executive Officer of Customs (CEO). The Act allows for a lower rate of customs duty on goods that are the subject of a Tariff Concession Order (TCO), provided that the core criteria specified in section 269C of the Act are met. These criteria include ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. The CEO was satisfied that the application met these criteria and subsequently issued TCO No. 0707613, declaring that the specified crane scales are subject to a zero percent duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995. This order came into force on 22 May 2007, the date the application was lodged, and does not retroactively affect any pre-existing rights or liabilities of parties other than the Commonwealth. The TCO is specific to the goods described in the application and does not extend to other goods or entities unless similarly applied for and approved under the Act.
Key Provisions
The main operative sections of the Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 0707613, require that the Chief Executive Officer (CEO) of Customs must consider an application for a Tariff Concession Order (TCO) when a party submits an application under section 269F (1). If the CEO is satisfied that the application pertains to goods that are not prohibited by section 269SJ and meets the core criteria as stipulated in section 269C, the CEO must make a written TCO. Section 269P(3) mandates that the TCO must specify that the goods in question are subject to a particular item of Schedule 4 to the Customs Tariff Act 1995, thereby granting them a concessional rate of customs duty. In this case, TCO No. 0707613 was issued on 27 July 2007, applying to certain crane scales by specifying item 50 of Schedule 4, resulting in a reduced duty rate from 5% to 0%.
The Act imposes several obligations on the parties involved. Firstly, applicants, such as W W Wedderburn Pty Ltd, must ensure their applications are made in accordance with section 269F and are not in respect of goods specified in section 269SJ. They must also provide sufficient information to demonstrate that no substitutable goods are produced in Australia, as per section 269C. The CEO, on the other hand, is required to evaluate the application against the core criteria and, if satisfied, issue a written TCO under section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed, as per section 269K(1). In this case, no objections were received.
Failure to comply with the Act’s provisions can lead to several consequences. Although the explanatory statement does not explicitly detail offences or penalties for breach, the seriousness of non-compliance could potentially lead to legal repercussions. For instance, if an applicant knowingly submits a false application or the CEO fails to properly evaluate an application, this could result in civil or criminal penalties under other sections of the Customs Act 1901. Such penalties might include fines or imprisonment, depending on the severity and intent of the breach. Moreover, any person found to be improperly benefiting from a TCO may face additional penalties, such as having to repay the duties or interest on the duties that should have been paid.