EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717597
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.
K Macnevin And Co Pty Ltd applied for a TCO in respect of certain compression ignition engine cab chassis trucks on 16 October 2007.
Instrument
TCO No 0717597 was made on 31 January 2008. It declares that those certain compression ignition engine cab chassis 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 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. 0717597 is taken to have come into force on 16 October 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, facilitates the administration of a scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specified goods, provided certain conditions are met. The Act was designed to address the need for flexible customs duty rates that can accommodate unique economic and industrial circumstances by offering tariff relief on goods for which no locally produced substitutes exist. The policy objective is to support industries that rely on imported components, thereby potentially lowering costs and increasing competitiveness without imposing undue burdens on other stakeholders. Tariff Concession Instrument No. 0717597, made in 2008, exemplifies this mechanism by granting free duty access to certain compression ignition engine cab chassis trucks, which were deemed non-substitutable by Australian production at the time of application.
Scope and Application
The Tariff Concession Instrument No. 0717597 is an application of the Customs Act 1901, specifically under Part XVA which deals with Tariff Concession Orders (TCOs). This legislation applies to entities or individuals seeking tariff concessions for specific goods, namely compression ignition engine cab chassis trucks, as in the case of K Macnevin And Co Pty Ltd. The primary focus of this Act is to reduce the customs duty rate for goods that are subject to a TCO, provided that no substitutable goods are produced in Australia in the ordinary course of business. The application process involves submitting a request to the Chief Executive Officer of Customs, who then determines if the application meets the core criteria, including the absence of substitutable goods in Australia. Once the CEO is satisfied, a written order is issued, which declares the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, thus making the duty rate free for these goods. The Act has a Commonwealth jurisdictional reach, and it does not impose any liabilities on individuals or entities for actions taken prior to the registration of the TCO. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901, specifically under Part XVA, details the process for Tariff Concession Orders (TCO) (section 269F). A TCO can reduce the customs duty on certain goods, and these orders are made by the Chief Executive Officer of Customs (CEO) upon application from a person (section 269C). To be eligible for a TCO, the goods in question must not be specified in section 269SJ, which lists goods that cannot be subject to a TCO. For the CEO to consider an application, it must be demonstrated that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C, 269D, 269E). If these conditions are met, the CEO is required to issue a TCO, which specifies the goods and the reduced duty rate applicable to them (subsection 269P(3)).
The obligations imposed by this legislation on the parties involved are primarily on the CEO of Customs. Once an application is received and deemed valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the making of the TCO (subsection 269K(1)). In the case of TCO No 0717597, concerning compression ignition engine cab chassis trucks, the CEO was satisfied that the conditions for a TCO were met and subsequently issued the order. The rights of importers are protected, with the TCO not affecting their rights as of the date of registration, and they may apply for a refund of any duties paid on these goods since the TCO came into force (paragraph 126(1)(r) of the Regulations).
The Customs Act 1901 does not explicitly state offences, penalties, or consequences for breaches related to the issuance or application of TCOs. However, failure to comply with the conditions set out in the Act, such as providing false information in an application or attempting to import goods that should not be subject to a TCO, could potentially lead to legal action under other sections of the Customs Act or related legislation. For instance, making false statements or representations could be considered an offence under section 221 of the Customs Act, which carries a maximum penalty of 10 years imprisonment. Additionally, any attempt to circumvent the provisions of a TCO could be considered an evasion of duty, also subject to penalties as outlined in the Act.