EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710102
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.
Clark Equipment Australia Pty Ltd applied for a TCO in respect of certain variable reach forklifts on 28 June 2007.
Instrument
TCO No 0710102 was made on 07 September 2007. It declares that those certain variable reach forklifts 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. 0710102 is taken to have come into force on 28 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 Tariff Concession Instrument No. 0710102, enacted under the Customs Act 1901, aims to address the need for tariff concessions on specific goods to encourage trade and economic efficiency. The instrument was introduced by the Chief Executive Officer of Customs (CEO) following an application by Clark Equipment Australia Pty Ltd for a tariff concession order (TCO) concerning certain variable reach forklifts on 28 June 2007. The CEO determined that no substitutable goods were produced in Australia and, thus, the application met the core criteria as specified under section 269C of the Act. Consequently, the CEO issued the TCO on 7 September 2007, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which resulted in the tariff rate for the specified forklifts being set at zero percent, down from the general rate of 5%. The instrument, which came into force on the date of the application, does not adversely affect the rights of any person and allows eligible importers to apply for a refund of duties paid on these goods since the effective date of the TCO.
Scope and Application
The Customs Act 1901 provides a mechanism through which tariff concessions can be applied to certain goods, effectively reducing the rate of customs duty for these items. Specifically, Tariff Concession Orders (TCOs) are authorised under Part XVA of the Act and can be applied for by any person, provided the goods in question are not specified in section 269SJ of the Act as ineligible for concession. The Chief Executive Officer of Customs (CEO) is responsible for determining whether an application for a TCO meets the core criteria, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. If the application meets these criteria, the CEO must issue a written TCO. The process includes a mandatory publication in the Gazette inviting any interested parties to object, though in the case of TCO No. 0710102, no objections were received. The concession applies from the date the application was lodged, in this instance, 28 June 2007, and benefits the rights of importers by allowing them to apply for a refund of duty on goods imported since that date. Importantly, the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO's effective date.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0710102 under the Customs Act 1901 (section 269C) involve the application process for Tariff Concession Orders (TCOs). An applicant can seek a TCO if the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from TCO eligibility. If the Chief Executive Officer of Customs (CEO) determines that the application meets the core criteria, notably the absence of substitutable goods produced in Australia (section 269P(3)), the CEO must issue a written order making the goods subject to the TCO. In this specific case, TCO No. 0710102 (section 269P(3)) was issued for certain variable reach forklifts, applying the tariff specified in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. Firstly, any person wishing to apply for a TCO must do so in accordance with section 269F of the Act. The CEO, upon receiving a valid application, is mandated to evaluate whether the application meets the core criteria, which includes ensuring that no substitutable goods are being produced in Australia at the time of application (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be granted (subsection 269K(1)). If no objections are received, the CEO is required to proceed with issuing the TCO.
Should any party breach the provisions of the Customs Act 1901 or related regulations, there may be significant consequences. For instance, if an applicant makes a false statement in their TCO application, they could face criminal penalties, including fines and imprisonment. The maximum penalty for such an offence is often substantial, reflecting the seriousness of providing misleading information to the CEO. Additionally, if a person improperly benefits from a TCO by, for example, importing goods that do not qualify for the concession, they may also face penalties, including financial fines and potential legal action to reclaim any undue benefits.
Under the Customs Act 1901, the TCO does not affect any pre-existing rights or impose new liabilities on persons other than the Commonwealth. This ensures that the introduction of the TCO does not retroactively disadvantage or penalise any party. For instance, any importer of the specified goods can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any new liabilities on individuals or entities, safeguarding them from any unexpected financial burdens stemming from the concession.