EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719765
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.
QMS Engineering Pty Ltd applied for a TCO in respect of certain parts track mounted ore crushers and or grinders on 21 November 2007.
Instrument
TCO No 0719765 was made on 01 February 2008. It declares that those certain parts track mounted ore crushers and or grinders 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. 0719765 is taken to have come into force on 21 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 Australian Parliament, provides a framework for administering customs duties and other import charges. This Act allows for the creation of Tariff Concession Orders (TCOs), which offer lower customs duty rates on certain goods. The purpose of the 2008 Tariff Concession Instrument No. 0719765, administered by the Chief Executive Officer of Customs, is to provide tariff concessions for specific imported goods, in this case certain parts of track mounted ore crushers and grinders. The instrument was introduced to address the need for reduced customs duties on goods for which no substitutable products are produced in Australia. This initiative aligns with the policy objective of supporting Australian industries by making imported goods more competitive, thereby potentially encouraging domestic production of such items in the future. The instrument came into effect on the date the application was lodged, 21 November 2007, and no submissions were received in opposition to the concession.
Scope and Application
The Customs Act 1901 provides a framework for the application and creation of Tariff Concession Orders (TCOs) through Part XVA, empowering the Chief Executive Officer of Customs to grant tariff concessions on specific goods. This Act applies to individuals or entities that seek to reduce customs duty on imported goods by applying for a TCO, provided the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. The Act requires that the CEO ensures no substitutable goods are produced in Australia at the time of application before making a decision. The application of this Act is national in scope, impacting all industries and entities engaging in the import of goods subject to customs duty. The geographic reach is national, encompassing the entire Commonwealth of Australia. The Act does not impose any liabilities or disadvantages to any person other than the Commonwealth, and any rights of importers are beneficially affected as they may apply for refunds of duty on goods imported since the TCO came into force. Any subordinate instruments or regulations that further define the application of this Act would extend or clarify the provisions herein without deviating from the core principles established by the Act itself.
Key Provisions
The Customs Act 1901 (the Act) allows for Tariff Concession Orders (TCOs) to be issued under Part XVA, which can reduce customs duty rates on certain goods. When a person applies for a TCO under section 269F, the Chief Executive Officer of Customs (CEO) must assess if the application meets the core criteria outlined in section 269C. This involves determining whether substitutable goods were being produced in Australia on the day the application was lodged, as defined by sections 269D, 269E, and 269F of the Act. If the CEO is satisfied that the application meets these criteria, they must issue a written TCO, specifying that the goods in question are subject to a particular tariff item, as indicated in the Customs Tariff Act 1995 (the Tariff).
Entities or individuals applying for a TCO are required to submit a valid application detailing the specific goods for which a tariff concession is sought. The CEO must then review the application against the criteria in section 269C of the Act, ensuring that no substitutable goods were produced in Australia on the application date. If the CEO is satisfied that the application meets the core criteria, they must make a written TCO and publish a notice in the Gazette, inviting any interested parties to submit objections. For example, QMS Engineering Pty Ltd applied for a TCO for certain parts of track-mounted ore crushers and grinders, which was subsequently issued on 1 February 2008, following a determination that no substitutable goods were produced in Australia.
The Act imposes several obligations on the CEO in relation to TCOs. Firstly, the CEO must assess applications against the core criteria specified in section 269C of the Act. This involves verifying that no substitutable goods were produced in Australia on the date of the application. If the CEO determines that the application meets the criteria, they must issue a TCO and publish a notice in the Gazette, inviting any interested parties to object. The CEO must also ensure that the TCO does not disadvantage any person or impose any liabilities on a person in respect of anything done or omitted to be done before the date of registration. In the case of TCO No. 0719765, the CEO issued a written order declaring that the certain parts of track-mounted ore crushers and grinders were subject to item 50 of Schedule 4 of the Tariff, with a duty rate of free instead of the general rate of 5%.
Failure to comply with the requirements of the Customs Act 1901, particularly in relation to the issuance of TCOs, may result in various legal consequences. While the specific penalties for breaches are not detailed in the Explanatory Statement, breaches of the Act may lead to civil or criminal penalties, depending on the nature and severity of the breach. The maximum penalties for breaches can vary significantly, from fines to imprisonment, and may depend on whether the breach is considered a minor infringement or a more serious violation. Importers who do not comply with the requirements for obtaining a TCO may also face penalties, including the potential loss of any tariff concessions they sought to obtain.