EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719749
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.
Bucyrus (Australia) Pty Ltd applied for a TCO in respect of certain asynchronous motors on 20 November 2007.
Instrument
TCO No 0719749 was made on 1 February 2008. It declares that those certain asynchronous motors 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. 0719749 is taken to have come into force on 20 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 was enacted to facilitate the regulation of customs duties and border control in Australia. Specifically, Part XVA of the Act establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The primary objective of this legislation is to provide a mechanism for granting tariff concessions on certain goods, thereby reducing the customs duty on those goods if specific criteria are met. The introduction of TCOs addresses the need to balance the economic interests of importers against the revenue needs of the government by allowing for reduced tariffs on goods that are not domestically produced. The process involves an application by a person to the CEO, followed by a determination of whether the application meets the core criteria, which notably include the absence of substitutable goods produced in Australia. The Tariff Concession Instrument No. 0719749, enacted in 2008, is an example of such an order, granting a tariff concession on certain asynchronous motors, reducing the duty from 5% to free, effective from the date of the application.
Scope and Application
The Tariff Concession Instrument No. 0719749, made under the Customs Act 1901, applies to certain asynchronous motors and pertains specifically to the granting of tariff concessions by the Chief Executive Officer of Customs. This instrument was made in response to an application by Bucyrus (Australia) Pty Ltd on 20 November 2007, and it came into force on the same day. The instrument grants a tariff concession to the applicant by applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which reduces the general rate of duty of 5% to a rate of duty that is free for the specified goods. The application process required the CEO to ensure that no substitutable goods were produced in Australia, a condition that was met in this instance. This instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Moreover, importers of the specified goods can apply for a refund of duty on goods imported since the date the TCO is taken to have come into force.
Key Provisions
Section 269F of the Customs Act 1901 allows for the application of Tariff Concession Orders (TCOs) by a person to the Chief Executive Officer (CEO) of Customs, aiming to reduce customs duty on certain goods. When an application is made under section 269F, the CEO must determine whether it meets the core criteria as outlined in section 269C. This requires the CEO to be satisfied that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the application satisfies these core criteria, the CEO must make a written TCO, as mandated by section 269P(3). For instance, in the case of Bucyrus (Australia) Pty Ltd's application for a TCO on certain asynchronous motors, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 0719749, effective from 20 November 2007.
The Act imposes several obligations on the CEO, primarily ensuring that TCO applications are processed in accordance with the stipulated criteria. The CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made. This requirement is detailed in subsection 269K(1) of the Act. In the case of TCO No. 0719749, no submissions were received in response to the published notice. Additionally, section 269S(1) mandates that a TCO comes into force on the day the application is lodged, meaning that the TCO for the asynchronous motors was effective from 20 November 2007.
Under section 269SJ of the Customs Act 1901, certain goods are excluded from the possibility of a TCO. This provision ensures that the concessions are applied judiciously and do not undermine the legislative intent. The TCO does not affect the rights of any person as at the date of registration in a manner that disadvantages them or imposes new liabilities. Specifically, the rights of importers will be positively affected, as they can apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations.
Breaches of the provisions set out in the Customs Act 1901, including the process for TCO applications, can lead to significant consequences. While the Act does not specify particular offences or penalties in relation to the TCO process itself, general provisions within the Act apply. For instance, contraventions of the Customs Act may result in civil penalties, including fines, or criminal penalties, including imprisonment, depending on the severity and intent of the breach. The maximum penalties can vary widely based on the specific provisions contravened and the discretion of the court.