EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718828
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.
Kone Elevators Pty Ltd applied for a TCO in respect of certain elevator compensation cables on 2 November 2007.
Instrument
TCO No 0718828 was made on 29 January 2008. It declares that those certain elevator compensation cables 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. 0718828 is taken to have come into force on 2 November 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 Commonwealth Parliament, governs the administration of customs duties and other charges in Australia. The Act provides for the establishment of a tariff concession scheme to offer preferential rates of duty on certain goods. This was introduced to address the gap in providing economic relief and encouraging the importation of goods that are not domestically produced or are not produced in sufficient quantities to meet demand. The Tariff Concession Instrument No. 0718828, issued under the authority of the Customs Act, aims to facilitate the reduction of customs duty for specific goods, thereby supporting businesses that rely on imported components. In this particular instance, Kone Elevators Pty Ltd applied for a tariff concession on elevator compensation cables, which was subsequently approved by the Chief Executive Officer of Customs, leading to a duty-free status for these goods as of the application date, 2 November 2007.
Scope and Application
The Tariff Concession Instrument No. 0718828 under the Customs Act 1901 applies to the concession of customs duty rates for specific goods. It pertains to individuals or entities that apply for and are granted a Tariff Concession Order (TCO) for goods specified in the instrument. This legislation specifically applies to elevator compensation cables for which Kone Elevators Pty Ltd applied, and it designates these cables to be subject to a zero percent duty rate instead of the general rate of 5%. The scope of the Act extends across the Commonwealth of Australia, affecting those involved in the importation or production of these specified goods. The Act excludes goods specified in section 269SJ of the Customs Act 1901, which cannot be subject to a TCO. Additionally, the Act allows for the application to be extended or restricted through subordinate instruments, although in this instance, no exclusions or additional conditions were noted. The commencement of the TCO is dated from the day the application was lodged, ensuring that no person other than the Commonwealth is disadvantaged by the change in duty rates for goods imported prior to the TCO's effective date.
Key Provisions
The Tariff Concession Order (TCO) No. 0718828, under the Customs Act 1901, applies to certain elevator compensation cables and was made effective from 2 November 2007. This order was issued by the Chief Executive Officer of Customs (CEO) following a successful application by Kone Elevators Pty Ltd on 2 November 2007. Section 269F of the Act allows for applications to be made for TCOs, which, if approved, apply a reduced rate of customs duty to specified goods. For these particular elevator compensation cables, the TCO specifies that item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, with the general duty rate of 5% being reduced to free.
The Act imposes several obligations on both the applicant and the CEO. Section 269C requires that for a TCO application to be valid, it must meet the core criteria, which include the absence of substitutable goods produced in Australia on the day the application was lodged. Section 269B defines key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." The CEO must also ensure that any TCO application is not in respect of goods specified in section 269SJ, which lists goods ineligible for TCOs. Additionally, under subsection 269K(1), the CEO is mandated to publish a notice in the Gazette inviting submissions if a TCO application is accepted as valid.
There are no specific offences or penalties outlined in the explanatory statement for breaches related to the TCO. However, the Customs Act 1901 and related regulations include general provisions for offences and penalties. For instance, section 132 of the Customs Act provides for penalties for various breaches, including fines and imprisonment. Similarly, the Customs Regulations 1994 may contain specific penalties for non-compliance with the terms of a TCO. While the explanatory statement does not detail maximum penalties, it is reasonable to infer that breaches of the TCO or related customs legislation could result in significant civil or criminal consequences as per the applicable provisions in the Customs Act and its regulations.