EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712626
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.
Macdonald Johnston Pty Ltd applied for a TCO in respect of certain suction street sweepers on 07 August 2007.
Instrument
TCO No 0712626 was made on 12 October 2007. It declares that those certain suction street sweepers 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. 0712626 is taken to have come into force on 07 August 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, establishes a framework for the administration of customs and excise duties, including provisions for Tariff Concession Orders (TCOs). The problem or gap that the Customs Act was introduced to address includes the regulation of customs duties and the facilitation of international trade by providing mechanisms for tariff concessions. TCOs, as outlined in Part XVA of the Act, enable the Chief Executive Officer of Customs to grant reduced customs duties on specified goods, provided that certain criteria are met. Specifically, a TCO may be issued if no substitutable goods are produced in Australia at the time of the application, ensuring that Australian industry is not unduly disadvantaged. The policy objective of this legislative framework is to support Australian businesses by potentially lowering the cost of imported goods, thereby encouraging competition and economic growth. Instrument No. 0712626, made under this authority, demonstrates the application of these provisions to a specific case involving suction street sweepers, resulting in a tariff concession from the general rate of 5% to a duty-free status.
Scope and Application
The Tariff Concession Instrument No. 0712626, made under the Customs Act 1901, applies to certain suction street sweepers and is specifically tailored to Macdonald Johnston Pty Ltd's application. This instrument allows for a tariff concession order (TCO) to be made by the Chief Executive Officer of Customs (CEO) if the core criteria are met, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The TCO reduces the customs duty rate for these specific goods from the general rate of 5% to free, effective from the date the application was lodged, 7 August 2007. The application process requires the CEO to publish a notice in the Gazette inviting submissions on the TCO application, although no submissions were received in response to the notice for this particular instrument. The instrument does not disadvantage any person or impose liabilities on any person other than the Commonwealth and beneficially affects the rights of importers by allowing them to apply for a refund of duty on goods imported since the date the TCO came into force.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0712626 under the Customs Act 1901 (section 269F) allow for the application by a person to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). Once an application is deemed valid and meets the core criteria set out in section 269C, the CEO is required to make a TCO that applies a lower rate of customs duty to the specified goods. Section 269P(3) further stipulates that if the CEO is satisfied that the application meets the core criteria, a written TCO must be issued.
The obligations and requirements imposed by the Act on the parties involved are quite specific. Under section 269C, an application for a TCO will meet the core criteria if, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. This involves a determination of what constitutes 'substitutable goods' as defined by section 269D and 'ordinary course of business' as defined by section 269E. Section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have objections to the TCO being issued. If no objections are lodged, the CEO proceeds to issue the TCO.
Under the Customs Act, breaches of the conditions set out for a TCO may result in civil or criminal consequences. For instance, if a person knowingly or negligently makes a false statement in an application for a TCO, they may be subject to penalties as prescribed by section 285-5 of the Act. These penalties can include fines and, in serious cases, imprisonment. The maximum penalties for such offences are detailed in the Act and can vary depending on the nature and severity of the breach. Additionally, failure to comply with the terms of a TCO may lead to the imposition of additional duties or fines as appropriate.