EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802908
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.
John Holland Pty Ltd applied for a TCO in respect of certain grout mixing plant on 21 February 2008.
Instrument
TCO No 0802908 was made on 16 May 2008. It declares that those certain grout mixing plant 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. 0802908 is taken to have come into force on 21 February 2008.
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, establishes a framework for the administration of customs duties, including the ability to grant tariff concession orders (TCOs) that lower the customs duty on certain goods. Specifically, the Act allows the Chief Executive Officer of Customs to make such orders if certain criteria are met, including that no substitutable goods are produced in Australia. This legislative framework was introduced to address the need for a mechanism to provide tariff relief on specific goods, potentially fostering economic efficiency and supporting domestic industries by reducing the cost of imported materials. The policy objective is to allow for the concession of tariffs where it is deemed that no domestic production of substitutable goods would be adversely affected.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specific goods, provided that certain criteria are met. Specifically, a TCO may be applied for by any person regarding goods, but the Act excludes certain goods specified in section 269SJ from being subject to a TCO. An application meets the core criteria if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Once the CEO is satisfied that the application meets these criteria, a written order is issued, reducing the duty on the specified goods. In the case of John Holland Pty Ltd, a TCO was issued for certain grout mixing plant, reducing the duty on these goods from the general rate of 5% to free. This concession applies nationally and commenced on the date the application was lodged, 21 February 2008. The TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the order was registered, and it benefits importers by allowing them to apply for a refund of duty on goods imported since the commencement date.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for Tariff Concession Orders (TCOs) under section 269F, enabling the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on specific goods. Section 269C stipulates that for a TCO application to meet core criteria, it must be lodged on a day when no substitutable goods were produced in Australia in the ordinary course of business. Section 269B defines the terms used in this context, such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods'. If the CEO is satisfied that these criteria are met, they must make a written TCO order as per section 269P(3).
The obligations under the Act require that once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette, inviting any objections to the proposed concession (subsection 269K(1)). In the case of TCO No. 0802908, no objections were received, and the order was made on 16 May 2008. This order declared that certain grout mixing plant would be subject to item 50 of Schedule 4 to the Tariff, with the general duty rate being 5% but reduced to free under the TCO. The TCO is considered to have come into force on the day the application was lodged, 21 February 2008, as per subsection 269S(1). Importantly, this TCO does not retroactively affect any rights or impose liabilities on anyone, ensuring that it only benefits importers by allowing them to apply for duty refunds on imports since the effective date.
Should any party or entity fail to comply with the provisions of the Customs Act, there could be significant consequences. While the specific offences and penalties are not detailed in the explanatory statement, breaches of customs regulations generally can lead to both civil and criminal penalties. Civil penalties can include fines, while criminal penalties can include imprisonment, reflecting the seriousness with which the law regards non-compliance. The exact penalties would depend on the nature and severity of the breach, as outlined in other sections of the Customs Act and related legislation.