EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717754
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 and accessories on 17 October 2007.
Instrument
TCO No 0717754 was made on 18 January 2008. It declares that those certain on road trucks parts and accessories 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. 0717754 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 to provide a regulatory framework for the administration of customs duties and associated matters in Australia. Specifically, the Act includes provisions for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which allow for the application of reduced or free customs duty on specified goods. This mechanism was introduced to address the need for flexibility in the imposition of customs duties to support economic and trade policy objectives, such as fostering competitiveness and encouraging the importation of specific goods that are not produced domestically. The policy objective is to facilitate trade by reducing the cost of imported goods where appropriate, thereby supporting businesses and consumers. The Parliament of Australia enacts such legislation to ensure that the customs regime is responsive to the needs of the economy and trade policy.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) scheme, applies to the concession of customs duty rates on specific goods, facilitating lower tariffs for those not produced in Australia in the ordinary course of business. The Act applies to individuals and entities that seek to import goods eligible for tariff concessions, provided the application meets the core criteria as defined under sections 269C and 269D of the Act. The instrument, TCO No. 0717754, was made on 18 January 2008, and it specifies that certain on-road truck parts and accessories are subject to a reduced customs duty rate of zero, as opposed to the general rate of 5%, due to the absence of substitutable goods produced in Australia. The application of this concession is Commonwealth-wide, affecting importers who can benefit from refunds on duty paid on goods imported since the TCO's effective date of 17 October 2007. The Act does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken before the TCO's registration. The scope of the Act can be further defined through subordinate instruments, which may include additional criteria or specific exclusions.
Key Provisions
The Tariff Concession Instrument No. 0717754 under the Customs Act 1901 (section 269F) outlines the process for applying for and making a Tariff Concession Order (TCO). If the Chief Executive Officer of Customs (CEO) is satisfied that the application for a TCO meets the core criteria, they must make a written order (section 269C). For the application to meet these criteria, it must be demonstrated that no substitutable goods were produced in Australia on the day the application was lodged (section 269P(3)).
The obligations imposed by the Act on the parties involved are primarily centred around the application process and the criteria for approval. The CEO is required to assess whether the application meets the core criteria by ensuring that no substitutable goods were produced in Australia on the day the application was lodged. Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO can proceed to make the TCO. The Act also ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and no new liabilities are imposed (subsection 269S(1)).
Breaches of the requirements set out in the Customs Act 1901 may lead to various consequences. While the explanatory statement does not explicitly detail the penalties for non-compliance, breaches of the Customs Act could potentially result in both civil and criminal penalties, depending on the nature and severity of the breach. Under section 283 of the Customs Act, a person who contravenes the Act may be liable to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for criminal offences. For civil penalties, subsection 283(2) provides that a person who contravenes a provision of the Act may be liable to a pecuniary penalty of up to 11,110 penalty units. These penalties reflect the seriousness with which the Act treats non-compliance and the potential impact on the integrity of the customs duty system.