EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0812001
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.
Nanduri Pty Ltd applied for a TCO in respect of certain water and or air cooled dc motors on 10 June 2008.
Instrument
TCO No 0812001 was made on 22 August 2008. It declares that those certain water and or air cooled dc motors 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. 0812001 is taken to have come into force on 10 June 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 Tariff Concession Instrument No. 0812001 was enacted under the Customs Act 1901 to address the issue of applying lower customs duty rates on specific goods through the issuance of Tariff Concession Orders (TCOs). This instrument was introduced to facilitate the import of certain water and air-cooled DC motors by granting them a free rate of duty as opposed to the general rate of 5%. This was achieved through the application of Nanduri Pty Ltd, which was processed by the Chief Executive Officer of Customs (CEO) who confirmed that no substitutable goods were produced in Australia at the time of the application. The enactment body for this legislation is the Australian Parliament, with the policy objective being to provide tariff concessions to support specific industries by reducing import costs, thereby encouraging economic activity and potentially fostering local industry growth.
The instrument was subject to a consultation process, whereby any interested party could submit objections to the CEO if they believed the TCO should not be granted. However, in this instance, no submissions were received. The TCO was effective from the date the application was lodged, which was 10 June 2008, and it did not affect any pre-existing rights or liabilities of parties other than the Commonwealth. Importers stood to benefit from this instrument as they could apply for a refund of duty on imports made since the commencement date.
Scope and Application
The Customs Act 1901, through its Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The Act applies to any person or entity seeking to import goods into Australia that may qualify for a lower rate of customs duty through a TCO. The scope of the Act encompasses specific goods that are not produced in Australia and do not have substitutable alternatives domestically, as outlined in section 269C. The application process requires the applicant to meet core criteria, including the absence of substitutable goods in Australia, as defined in section 269D. The geographic reach of the Act is national, with the application of TCOs being subject to the broader Australian customs framework. The Act does not apply to goods specified in section 269SJ, which cannot be subject to a TCO. The instrument, TCO No. 0812001, applies specifically to certain water and air-cooled DC motors, granting them a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO came into effect on 10 June 2008, the date the application was lodged, and does not impose any liabilities on persons other than the Commonwealth.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0812001, as it pertains to the Customs Act 1901, involve the application and consideration of Tariff Concession Orders (TCOs) (ss 269C, 269F, 269P). Specifically, the instrument outlines the process for applying for a TCO and the criteria that must be met for the CEO to approve such an application (s 269C). If an application is deemed to meet the core criteria, the CEO must issue a TCO that specifies the goods and the applicable rate of customs duty (s 269P(3)). In this particular case, the TCO No. 0812001 pertains to certain water and air-cooled DC motors, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, with a rate of duty that is free of charge (s 269S(1)).
The Customs Act 1901 imposes certain obligations on parties applying for a TCO. An applicant must ensure that their application is not in respect of goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. Furthermore, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application (s 269K(1)). This notice invites any person who believes there are reasons why the TCO should not be made to submit their views to the CEO. The CEO must then consider these submissions in making their decision.
The Act also delineates the consequences of breaching its provisions. Although specific offences and penalties related to the TCO process are not detailed in the explanatory statement, breaches of the Customs Act 1901 generally could lead to criminal and civil penalties. For example, knowingly or recklessly making a false statement in a customs document can attract criminal penalties, including fines and imprisonment (s 251A). For civil penalties, subsection 275(1) allows the Commissioner of Customs to issue a penalty notice for certain breaches, with the maximum penalty often tied to the seriousness of the offence. It is also important to note that the TCO itself does not impose any liabilities on any person, ensuring that no one other than the Commonwealth is disadvantaged by its terms.
Given the specified criteria for TCO applications and the process for their approval, any failure to adhere to the legislative requirements can lead to significant repercussions. Ensuring compliance with the Act's provisions, particularly around the publication of notices and consideration of submissions, is crucial to avoid potential penalties and maintain the integrity of the tariff concession scheme.