EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0715791
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.
Western Star Trucks Australia Pty Ltd applied for a TCO in respect of certain parts and accessories on road trucks on 19 September 2007.
Instrument
TCO No 0715791 was made on 10 December 2007. It declares that those certain parts and accessories on road trucks 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. 0715791 is taken to have come into force on 19 September 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 was amended to introduce the Tariff Concession Orders (TCO) scheme through Part XVA, which allows the Chief Executive Officer of Customs to implement tariff concessions on certain goods. Enacted by the Australian Parliament, this legislative amendment aimed to address the gap in providing tariff concessions that encourage the import of goods not produced in Australia, thereby fostering competition and potentially lowering costs for consumers. The policy objective of this scheme is to facilitate the import of goods that are not domestically produced, subject to certain criteria that ensure these imports do not substitute for Australian-made goods. By reducing or eliminating customs duties on specific imported goods, the Act seeks to benefit importers by potentially lowering their costs and increasing the variety of goods available in the market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). The Act applies to individuals or entities seeking to import goods into Australia, allowing them to apply for a TCO if certain conditions are met. The primary condition, as outlined in section 269C, is that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. This ensures that the concession is granted to encourage importation when there is no local production of equivalent goods. The TCO applies nationally, and its effects commence on the date the application is lodged, as stipulated in subsection 269S(1). Importantly, the TCO does not retroactively affect any rights or liabilities of individuals or entities other than the Commonwealth, nor does it impose new liabilities. This legislative framework is intended to provide relief to importers by reducing customs duties, thereby encouraging trade and potentially lowering the cost of imported goods.
Key Provisions
The Tariff Concession Instrument No. 0715791, under the Customs Act 1901, establishes a mechanism through which the Chief Executive Officer (CEO) of Customs can grant Tariff Concession Orders (TCOs). These orders apply lower rates of customs duty to specific goods. Section 269F allows any person to apply to the CEO for a TCO in relation to particular goods, provided these goods are not listed in section 269SJ, which excludes certain goods from TCO eligibility. If the application is valid and meets the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia at the time of application, the CEO must grant the TCO. This order, as seen in section 269P(3), specifies that the goods in question will be subject to a reduced duty rate outlined in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on parties include the requirement for applicants to ensure their applications meet the eligibility criteria and that the CEO is notified of any potential substitutable goods produced in Australia. The CEO has the duty to review applications against these criteria and to publish notices inviting objections to the proposed TCO in the Gazette, as mandated by subsection 269K(1). The CEO must also consider any submissions received in response to these notices and decide on the TCO based on the application's compliance with the core criteria. The Act ensures that the rights of individuals are protected by stipulating that the TCO does not disadvantage any person in relation to actions taken before the TCO's effective date, nor does it impose new liabilities.
In terms of breaches and penalties, the Customs Act 1901 does not explicitly outline penalties for failing to comply with the requirements for TCOs. However, any general breaches of the Customs Act may incur penalties under section 236, which can include fines of up to $22,200 or imprisonment for up to two years, or both. For specific contraventions of TCO regulations, penalties might be prescribed under related legislation or administrative guidelines. The Act ensures that the rights of importers are protected, allowing them to apply for duty refunds under the regulations, without any adverse effect from the TCO on their pre-existing rights.