EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710050
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.
Hard Metal Industries Pty Ltd applied for a TCO in respect of certain road header and tunnelling machine parts on 27 June 2007.
Instrument
TCO No 0710050 was made on 07 September 2007. It declares that those certain road header and tunnelling machine 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 free.
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. 0710050 is taken to have come into force on 27 June 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, as amended, includes provisions for the creation of Tariff Concession Orders (TCOs) to provide duty concessions on certain goods. Enacted by the Australian Parliament, this legislation was introduced to address the need for a streamlined process in which the Chief Executive Officer of Customs can reduce or eliminate customs duties on specific goods, provided certain criteria are met. This mechanism supports economic efficiency by ensuring that Australian businesses are not unduly burdened by tariffs on goods that cannot be produced domestically, thereby encouraging competitive pricing and market access. The Tariff Concession Instrument No. 0710050, made in 2007, exemplifies this by applying a zero duty rate on certain road header and tunnelling machine parts, facilitating their import and use in Australia. The policy objective is to foster an environment where Australian industries can operate competitively without unnecessary financial barriers imposed by customs duties on non-domestically produced goods.
Scope and Application
The Tariff Concession Instrument No. 0710050, made under the Customs Act 1901, applies to goods specified in the instrument, specifically certain road header and tunnelling machine parts, and operates within the Commonwealth of Australia. The Act allows for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) which reduce the rate of customs duty on specified goods, provided the application meets the core criteria and no substitutable goods are produced in Australia. This instrument was made following an application by Hard Metal Industries Pty Ltd on 27 June 2007, and came into effect on the same date. It declares that the specified parts are subject to a 5% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively granting a free rate of duty. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on persons for actions taken before the instrument's registration. The rights of importers are positively affected, as they can apply for refunds of duty on goods imported since the instrument's effective date.
Key Provisions
Section 269F of the Customs Act 1901 (the Act) provides the mechanism by which an individual or entity can apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of particular goods. If the CEO determines that the application pertains to goods not listed in section 269SJ, which specifies goods that cannot be subject to a TCO, the CEO must then assess whether the application meets the core criteria as outlined in section 269C. For an application to meet these criteria, it must be established that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269B respectively.
The obligations imposed by the Act on parties seeking a TCO include ensuring that their application complies with the legislative requirements and providing sufficient evidence to support their claim that the goods in question are not substitutable by any Australian-produced goods. The CEO is required to make a written order, a TCO, if satisfied that the application meets the core criteria. This order declares the goods in question to be subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made, as stipulated in section 269K(1) of the Act.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs may result in legal consequences. While the explanatory statement does not explicitly detail offences or penalties, breaches of the Customs Act generally may lead to criminal and civil penalties. For instance, knowingly making a false statement in an application could result in a fine or imprisonment, as per section 272 of the Act. The specific penalties would depend on the nature and severity of the breach, with potential maximum penalties outlined in other sections of the Act and associated regulations. Importers who successfully apply for a TCO may also be eligible for refunds of duty on goods imported since the date the TCO is deemed to have come into force, as per Regulation 126(1)(r).