EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0814987
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.
Atlas Copco Australia Pty Ltd applied for a TCO in respect of certain rock drilling and bolting rigs on 27 June 2008.
Instrument
TCO No 0814987 was made on 19 September 2008. It declares that those certain rock drilling and bolting rigs 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. 0814987 is taken to have come into force on 27 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework under which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) to lower the customs duty on certain goods. This legislation was introduced to address the need for economic efficiency and competitiveness in the importation of goods, particularly when no suitable substitutes are produced domestically. The Tariff Concession Instrument No. 0814987, made under this Act, was specifically introduced following an application from Atlas Copco Australia Pty Ltd for certain rock drilling and bolting rigs. The instrument was enacted to declare that these rigs are subject to a duty rate of free, down from the general rate of 5%, as no substitutable goods were produced in Australia. This measure aims to facilitate the importation of these goods without imposing any disadvantage or liability on importers, thereby promoting trade and economic activity.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for specified goods, thereby providing a lower rate of customs duty. This legislation applies to individuals and entities seeking tariff concessions for imported goods, ensuring they meet the core criteria outlined in the Act. Such criteria include the absence of substitutable goods produced in Australia in the ordinary course of business on the date the application is lodged. The geographic and jurisdictional reach of this Act is national, governed by the Commonwealth. Exclusions apply to goods specified in section 269SJ, which cannot be subject to a TCO. The application process involves the CEO making a decision based on the application and may be extended or restricted through subordinate instruments. The Tariff Concession Instrument No. 0814987, which came into effect on 27 June 2008, exemplifies the application of this Act by granting a tariff concession for certain rock drilling and bolting rigs, reducing their duty rate from 5% to free.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0814987 under the Customs Act 1901 (section 269P(3)) declare that certain rock drilling and bolting rigs are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies. This means these specified goods will be subject to a reduced duty rate of free, instead of the general rate of duty of 5% (section 269C). The instrument is effective from 27 June 2008, the date on which the application was lodged (subsection 269S(1)). The instrument also ensures that the tariff concession does not affect the rights of any person, except to provide benefits to importers who may apply for a refund of duty on goods imported since the concession came into force (paragraph 126(1)(r) of the Regulations).
The obligations and requirements imposed by this Act on the parties it governs include the necessity for the Chief Executive Officer of Customs (CEO) to determine whether an application for a Tariff Concession Order (TCO) meets the core criteria (section 269C). The CEO must ensure that, on the day the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business (section 269D and section 269E). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made (subsection 269K(1)). The CEO is also required to make a written order declaring the goods subject to the TCO (subsection 269P(3)).
Under the Customs Act 1901, any failure to comply with the requirements or obligations set forth can lead to various consequences. If the CEO does not properly assess an application or fails to consider submissions made in response to the Gazette notice, this could potentially lead to improper tariff concessions being granted, which might result in financial losses for the government. However, the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breaches of the Act, only stating that the TCO does not impose any liabilities on any person (subsection 269S(1)). Therefore, it is likely that any legal repercussions would be subject to general legal principles and other applicable laws.