EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0807948
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.
QR Limited applied for a TCO in respect of certain locomotive traction inverters on 13 May 2008.
Instrument
TCO No 0807948 was made on 01 August 2008. It declares that those certain locomotive traction inverters 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. 0807948 is taken to have come into force on 13 May 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, facilitates the application of tariff concessions on certain goods to ensure economic efficiency and competitiveness. In 2008, the Customs Act was amended to introduce Tariff Concession Orders (TCOs), allowing the Chief Executive Officer of Customs to apply reduced rates of customs duty on specified goods. This mechanism was designed to address the gap where certain imported goods, for which no domestic substitutes were produced, could benefit from tariff concessions if they met specific criteria. This process was intended to support Australian industries by preventing undue competition from imported goods that could not be substituted by domestic products, thereby ensuring that the tariff concessions do not negatively impact local businesses. The TCO No. 0807948, for instance, was made to provide a zero-rate duty on certain locomotive traction inverters, as no substitutable goods were produced in Australia, reflecting the policy objective of the Act to promote fair trade practices and economic growth.
Scope and Application
The Tariff Concession Instrument No. 0807948, made under the Customs Act 1901, applies to specific goods for which a Tariff Concession Order (TCO) has been granted, in this instance, certain locomotive traction inverters. The Act is applicable to any person or entity seeking tariff concessions for goods that are not produced in Australia in the ordinary course of business and for which no suitable Australian-made substitutes exist. The Act operates nationally as it falls under Commonwealth legislation, impacting customs duty rates across Australia. The TCO is effective from the date the application was lodged, 13 May 2008, and it exempts the specified goods from the general customs duty rate, effectively setting it to zero. The Act excludes goods specified in section 269SJ, which cannot be subject to a TCO, and does not impose liabilities on any person for actions taken before the TCO's effective date. The legislation may be extended or refined through subordinate instruments, but no such extensions or restrictions are specified in the explanatory statement for this particular TCO.
Key Provisions
The primary sections of the Customs Act 1901 that are relevant to the issuance and effects of a Tariff Concession Order (TCO) include section 269F (application for a TCO), section 269C (core criteria for a TCO), and section 269P (making of a TCO). Section 269F allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO, provided the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must make a TCO, as stipulated in section 269P.
The obligations imposed on parties or entities by this legislation include the requirement for applicants to ensure that the goods in question are not listed in section 269SJ of the Act. The CEO, on receiving a valid application, must publish a notice in the Gazette inviting submissions from any interested parties. If no submissions are received, the CEO must proceed to decide whether the application meets the core criteria, which include the condition that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D, 269E, and 269F.
In terms of penalties and consequences, the Customs Act 1901 does not explicitly outline specific penalties for breaches related to TCO applications. However, the failure to comply with the conditions set forth in the Act or the regulations may result in the invalidation of the TCO or other administrative actions deemed necessary by the CEO. Any misuse of the tariff concession could potentially lead to further scrutiny, audits, or even legal action to rectify any incorrect claims or improper use of the tariff concession. Importers who do not adhere to the correct procedures or who make false statements may face administrative penalties or be required to repay any unlawfully claimed refunds of duty.