EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717753
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 on road trucks parts on 17 October 2007.
Instrument
TCO No 0717753 was made on 18 January 2008. It declares that those certain on road trucks 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. 0717753 is taken to have come into force on 17 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 was enacted by the Parliament of Australia to regulate the importation and exportation of goods, including the collection of customs duty. The Act provides for the establishment of a tariff concession scheme, under which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to apply lower rates of customs duty on certain goods. The problem this legislation addresses is the potential for undue financial burden on businesses and consumers by applying reduced tariff rates to goods that are not domestically produced or for which no suitable substitutes are available in Australia. The Tariff Concession Instrument No. 0717753, enacted in 2008, aims to provide tariff concessions on specific on-road truck parts, facilitating easier access to these components and potentially reducing costs for businesses in the automotive sector. The instrument was created following an application by Western Star Trucks Australia Pty Ltd, and after consultation, no objections were raised, leading to the order's implementation from the date of the application.
Scope and Application
The Customs Act 1901 applies to any individual or entity involved in the importation of goods into Australia, with a particular focus on the concessions available under Tariff Concession Orders (TCOs). This legislation enables the Chief Executive Officer of Customs to grant tariff concessions on specific goods, provided they meet the core criteria outlined in the Act. A TCO can be applied for by any person, and if approved, it results in a lower rate of customs duty on the specified goods, as seen in the case of Western Star Trucks Australia Pty Ltd’s application for certain on-road truck parts. The geographic reach of the Act is national, as it pertains to all imports into Australia and operates under the framework of the Customs Act 1901. The Act excludes certain goods from being subject to a TCO as per section 269SJ. The application and approval process for a TCO involves public consultation, although in the case of TCO No. 0717753, no objections were received. The commencement date of a TCO is the date the application is lodged, and the order does not affect any pre-existing rights or impose new liabilities on individuals or entities except the Commonwealth.
Key Provisions
The main operative sections of this legislation concern the creation and effect of Tariff Concession Orders (TCOs) under the Customs Act 1901. Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning certain goods. The CEO, after verifying that the goods do not fall under the prohibited categories outlined in section 269SJ, must assess whether the application meets the core criteria specified in section 269C. If the CEO determines that the application satisfies these criteria, they are mandated by subsection 269P(3) to issue a written TCO order. This order then applies a reduced customs duty rate to the specified goods, as detailed in Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved are primarily on the CEO. They must ensure that any TCO application is valid and meets the specified criteria before issuing an order. This involves confirming that no substitutable goods were produced in Australia on the date the application was lodged, as defined by sections 269B, 269D, and 269E. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO. This process ensures transparency and allows for stakeholder input before the TCO is finalised.
In terms of consequences for non-compliance, the Act does not explicitly outline criminal or civil penalties for breaches related to TCOs. However, the consequences of improperly applying for or being issued a TCO could include legal challenges or administrative penalties. For instance, if a TCO is incorrectly issued due to a failure to meet the core criteria, the order could be contested in court, potentially leading to its revocation and the reimposition of the standard customs duty. Furthermore, any person adversely affected by an improperly issued TCO may seek a refund of duties paid under the incorrect tariff as per paragraph 126(1)(r) of the Regulations.