EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0815257
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.
Caterpillar Of Australia applied for a TCO in respect of certain off road vehicles and earth moving equipment parts on 30 June 2008.
Instrument
TCO No 0815257 was made on 26 September 2008. It declares that those certain off road vehicles and earth moving equipment parts 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. 0815257 is taken to have come into force on 30 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 Commonwealth Parliament, includes a scheme for Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs. This scheme was introduced to provide lower rates of customs duty on specified goods, where certain conditions are met, such as the absence of substitutable goods produced in Australia in the ordinary course of business. One such TCO, No. 0815257, was made on 26 September 2008, in response to an application from Caterpillar of Australia regarding certain off-road vehicles and earth-moving equipment parts. This TCO declares that these goods are subject to a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, as no substitutable goods were produced in Australia. The policy objective is to facilitate the importation of these goods without the burden of customs duty, thereby potentially stimulating economic activity and supporting industries that rely on such equipment.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). The Act applies to any person or entity that seeks to apply for a TCO for goods, provided the application does not concern goods specified in section 269SJ of the Act, which are ineligible for TCOs. The legislation is applicable nationally, as it is a Commonwealth Act, affecting all states and territories within Australia. A TCO application is subject to core criteria, primarily focusing on whether substitutable goods are produced in Australia, as defined by sections 269D and 269E of the Act. The scope of the Act extends to allow for the CEO to issue TCOs which lower the rate of customs duty on specific goods, such as certain off-road vehicles and earth-moving equipment parts, upon determining that no substitutable goods are produced domestically. Any subordinate instruments or regulations that further clarify or expand upon the application of TCOs would need to be consistent with the provisions outlined in the Customs Act 1901.
Key Provisions
The primary sections of the Tariff Concession Order No. 0815257 under the Customs Act 1901 (section 269F) allow the Chief Executive Officer of Customs (CEO) to grant tariff concessions on specific goods. This process begins when an application is submitted by an interested party, such as Caterpillar of Australia in this case, requesting a tariff concession for certain goods. If the CEO determines that the application meets the core criteria, including that no substitutable goods were produced in Australia on the application date (section 269C), a written order is issued. This order declares the specified goods to be eligible for a reduced duty rate (section 269P(3)).
The obligations imposed by this legislation on the relevant parties include the requirement for the CEO to assess the validity of the tariff concession application. This assessment must consider whether the goods in question are substitutable by Australian-made products and whether they are produced in the ordinary course of business. If the application is deemed valid, the CEO must issue a written order as a Tariff Concession Order (section 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the tariff concession should not be granted (section 269K(1)). In this instance, no submissions were received, leading to the issuance of the TCO.
Any breach of the provisions of the Customs Act 1901 or the associated regulations could result in various consequences. While the specific penalties for non-compliance are not detailed in the explanatory statement, breaches of customs legislation typically carry significant penalties. Under the Customs Act, penalties can include fines and imprisonment for serious offences, with the exact penalties varying depending on the nature and severity of the breach. For example, knowingly making a false statement in a customs document could result in a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. It is important for parties involved to ensure strict compliance to avoid these potential penalties.
The Tariff Concession Order No. 0815257, which came into force on 30 June 2008, ensures that the rights of importers are positively affected by providing them with the ability to apply for duty refunds on goods imported since the TCO's effective date. This order does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person for actions taken prior to the TCO's registration (subsection 269S(1)). By reducing the duty rate for certain off-road vehicles and earth-moving equipment parts to free, the TCO aims to benefit the importing entities, provided they adhere to the established guidelines and obligations.