EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0827892
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 earthmoving machines parts being o rings on 22 August 2008.
Instrument
TCO No 0827892 was made on 14 November 2008. It declares that those certain earthmoving machines parts being o rings 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. 0827892 is taken to have come into force on 22 August 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. 0827892 was enacted in 2008 under the Customs Act 1901, addressing a specific gap in tariff concessions for certain goods. This legislation was introduced to facilitate lower customs duties on specific goods, thereby promoting economic efficiency and potentially stimulating import activities by reducing the cost burden on importers. The instrument was established to allow the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) for goods not produced domestically and for which there are no substitutable goods available in Australia, thus ensuring that such goods are subject to a lower rate of duty. The policy objective, as outlined in the Act, is to enhance the competitiveness of Australian industries by allowing for tariff concessions that can lead to cost savings and increased import activities.
The instrument was enacted following an application by Caterpillar Of Australia for tariff concessions on certain earthmoving machine parts, specifically o rings. The Customs Act 1901 mandates that the CEO must consider applications for TCOs and determine if they meet the core criteria, which include the absence of substitutable goods produced in Australia. After assessing the application, the CEO made the Tariff Concession Order No. 0827892, declaring that these specific parts are subject to a free rate of duty. This decision was based on the finding that no substitutable goods were produced in Australia, aligning with the legislative framework that seeks to benefit importers and the broader market by reducing tariff barriers.
Scope and Application
The Tariff Concession Instrument No. 0827892 under the Customs Act 1901 applies specifically to goods for which a Tariff Concession Order (TCO) has been applied and subsequently granted. This instrument pertains to the application made by Caterpillar Of Australia for certain earthmoving machine parts, specifically O rings, which have been granted a concession to be subject to a lower rate of customs duty. The Act allows for applications to be made by any person seeking a concession on behalf of goods, provided those goods are not explicitly excluded under section 269SJ. The application must meet core criteria set out in the Act, specifically that no substitutable goods are produced in Australia in the ordinary course of business. Upon satisfaction of these criteria by the Chief Executive Officer of Customs, a TCO is issued, as was the case for these O rings which now attract a duty rate of free rather than the general rate of 5%. The instrument has a national jurisdictional reach and applies across all states and territories in Australia. No exclusions, exemptions, or thresholds are specified within this particular instrument, although the broader Customs Act may contain provisions that could affect its application. The TCO does not affect existing rights or impose new liabilities on any persons other than the Commonwealth.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCO) through section 269F, whereby a person may apply to the Chief Executive Officer of Customs (CEO) for a concession in customs duty rates for certain goods. Section 269C stipulates that a TCO application meets core criteria if no substitutable goods were produced in Australia on the day the application was lodged, with definitions provided in sections 269D, 269E, and 269F for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." If the CEO is satisfied that the application meets the core criteria, they must make a written order as per section 269P(3), declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
The obligations under this legislation primarily rest on the CEO to determine whether an application for a TCO meets the core criteria and to make the order if satisfied. The CEO must also, as per section 269K(1), publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, although in this instance, no submissions were received. The CEO's role is also to ensure that the rights of importers are beneficially affected and that they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
Should there be a breach of the conditions set forth in the Tariff Concession Instrument No. 0827892, penalties or consequences could include the imposition of the general rate of duty on the goods in question, which, for the specified earthmoving machine parts, would be 5%. There are no specific penalties stated within the document for breaches; however, the general provisions of the Customs Act 1901 would apply, which could include fines and potential criminal charges for wilful or negligent breaches. The CEO would be responsible for enforcing compliance with the TCO and taking appropriate action against any breaches.