EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721974
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.
Downer EDI Rail Pty Ltd applied for a TCO in respect of certain passenger trains on 21 December 2007.
Instrument
TCO No 0721974 was made on 14 March 2008. It declares that those certain passenger trains 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. 0721974 is taken to have come into force on 21 December 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 the regulation of imports and exports within Australia. One significant aspect of this Act is Part XVA, which allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. This mechanism was introduced to address the problem of ensuring that Australian industries remain competitive by allowing for tariff concessions on specific goods that are not produced domestically, thus preventing the imposition of customs duties on such goods. Instrument No. 0721974, made under this Act, exemplifies the application of TCOs to specific goods, such as certain passenger trains, where the CEO determined that no substitutable goods were produced in Australia. This instrument effectively grants a tariff concession, reducing the customs duty on these goods from 5% to free, thereby enhancing the competitive position of the importer and benefiting the importing industry.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer (CEO) of Customs can apply a lower rate of customs duty to certain goods. The application process for a TCO is initiated by a person, who must ensure their application does not pertain to goods specified in section 269SJ of the Act that are ineligible for tariff concessions. The CEO evaluates whether the application meets the core criteria, notably if no substitutable goods were produced in Australia in the ordinary course of business at the time of application. If the core criteria are satisfied, the CEO issues a TCO, as exemplified by TCO No. 0721974, which applies to certain passenger trains, reducing their duty rate from 5% to free. The application of TCOs is national in scope, affecting all entities involved in the importation of specified goods within Australia. The Act does not impose liabilities on persons other than the Commonwealth and does not retroactively disadvantage them. The TCO's commencement date aligns with the application date, allowing for duty refunds to importers under specific regulatory provisions.
Key Provisions
The primary operative sections of this legislation pertain to the process by which Tariff Concession Orders (TCO) are made under the Customs Act 1901 (sections 269C, 269F, 269K(1), 269P(3) and 269S). Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods, provided these goods do not fall under the exclusions specified in section 269SJ. The CEO must then determine if the application meets the core criteria, outlined in section 269C, which primarily concerns whether substitutable goods were produced in Australia at the time the application was made. If these criteria are met, the CEO is required by section 269P(3) to issue a TCO, effectively applying a prescribed tariff concession from the Customs Tariff Act 1995 to the specified goods.
The obligations imposed on the parties by this legislation include the requirement for the CEO to consider applications for TCOs and to ensure that any application complies with the core criteria. Additionally, once an application is accepted as valid, the CEO must publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to submit their views on whether the TCO should proceed. In this instance, the CEO did not receive any submissions opposing the TCO.
In terms of penalties and consequences, the Customs Act 1901 does not specify particular offences or penalties for non-compliance with the provisions related to TCOs. However, any breach of the terms of a TCO or failure to adhere to the statutory requirements for their application could potentially result in the nullification of the concession, thereby imposing the standard tariff on the goods. The consequences would primarily be financial, affecting the importers' duty liabilities and potentially leading to disputes over duty refunds if the TCO is later deemed invalid.