EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0804437
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.
Air Brake Corporation Of Australia Pty Ltd applied for a TCO in respect of certain relay valves on 20 March 2008.
Instrument
TCO No 0804437 was made on 6 June 2008. It declares that those certain relay valves 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. 0804437 is taken to have come into force on 20 March 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 was enacted to establish a regulatory framework governing the importation and exportation of goods within Australia, among other things. One of the mechanisms under this Act is the Tariff Concession Order (TCO), which allows for the reduction or exemption of customs duty on specific goods. The problem or gap that this legislative framework addresses is the need to facilitate trade by reducing the cost burden on importers of certain goods, thereby encouraging trade and economic activity. The Tariff Concession Instrument No. 0804437 was introduced to provide a tariff concession for certain relay valves, reducing their duty rate from 5% to free. This was achieved through the Chief Executive Officer of Customs, who determined that no substitutable goods were produced in Australia, thereby meeting the core criteria for a TCO. The policy objective, as implied in the Act, is to support and enhance Australia's trade activities by making imported goods more affordable.
Scope and Application
The Customs Act 1901, specifically under Part XVA, enables the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCO) that reduce the rate of customs duty on certain goods. This provision applies to any person or entity that applies for such a concession on goods that are not listed in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The scope of the Act extends across Australia, given its Commonwealth nature, and applies to all entities engaged in importing goods into the country. A TCO can be applied for if, on the day the application is made, no substitutable goods are produced in Australia in the ordinary course of business, as outlined in sections 269C and 269D of the Act. The CEO must make a written order if satisfied that the application meets the core criteria. Once published in the Gazette, the TCO comes into force on the day the application is lodged, as per subsection 269S(1) of the Act. Notably, the TCO does not affect any existing rights or liabilities of persons, other than the Commonwealth, incurred before the TCO's registration date.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 0804437, are found under Part XVA of the Customs Act 1901 (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269K). Section 269F allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). Section 269C specifies the core criteria for an application to be considered valid, requiring that no substitutable goods were produced in Australia on the day the application was lodged. Section 269B defines the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the CEO determines that the application meets these criteria, they must issue a written order under section 269P(3), declaring that the specified goods are subject to a particular rate of duty as outlined in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations on the parties it governs. The CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested party to lodge a submission if they believe there are reasons why the TCO should not be made (subsection 269K(1)). Additionally, the CEO is required to ensure that any TCO application not concerning goods specified in section 269SJ of the Act is assessed against the core criteria set out in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a TCO specifying the prescribed item of Schedule 4 to the Tariff that applies to the goods in question.
Breaches of the provisions outlined in this legislation can lead to various consequences. Although specific offences and penalties are not detailed in the explanatory statement, the Customs Act 1901 generally includes provisions for both civil and criminal penalties for non-compliance with its requirements. The penalties can vary depending on the nature and severity of the breach, potentially including fines and imprisonment. The Customs Act 1901 also includes provisions for the assessment and recovery of unpaid duties and other charges, which could result in additional financial liabilities for those who fail to comply with the Act's requirements.