EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0834253
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.
Bombardier Transportation applied for a TCO in respect of certain axle & final drive assembly on 03 October 2008.
Instrument
TCO No 0834253 was made on 12 January 2009. It declares that those certain axle & final drive assembly 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. 0834253 is taken to have come into force on 03 October 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 was amended to incorporate Tariff Concession Orders (TCOs) through Part XVA, which allows the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain imported goods. Enacted by the Parliament of Australia, this legislation addresses the need to incentivise the importation of specific goods that are not produced domestically or for which there are no suitable substitutes available in Australia. The policy objective is to ensure that consumers and businesses can access goods that are either not produced locally or are prohibitively expensive if subjected to full customs duty, thereby promoting competition and potentially lowering prices. The process requires an application by an interested party, followed by a review by the CEO to determine if the application meets the core criteria, which notably includes a check that no substitutable goods are produced in Australia. If the criteria are met, a TCO is issued, effectively applying a lower rate of duty or making the duty free. This mechanism is intended to facilitate trade and support economic activities that rely on the import of specific goods.
Scope and Application
The Customs Act 1901 applies to any individual or entity seeking to import goods into Australia, with specific provisions regarding Tariff Concession Orders (TCOs) outlined in Part XVA. These orders, which can be applied for by any person, allow for a lower rate of customs duty on specified goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. The scope of this Act is further delineated by section 269SJ, which excludes certain goods from being subject to a TCO. The application process involves the Chief Executive Officer of Customs, who must ensure the application meets the core criteria, including the absence of Australian-made substitutable goods. The application's geographic reach is national, as it pertains to the importation of goods into Australia. The application of the Act is not restricted by state or territory boundaries, making it a Commonwealth legislation. The Act may extend or restrict its application through subordinate instruments, such as regulations, which provide additional details on the implementation and administration of TCOs.
Key Provisions
The Tariff Concession Instrument No. 0834253, under the Customs Act 1901, applies a zero rate of customs duty to certain axle and final drive assemblies, effective from the date the application was lodged (section 269S(1)). This is a concession granted in response to an application by Bombardier Transportation, which was made on 3 October 2008 and processed by the Chief Executive Officer of Customs (CEO) on 12 January 2009 (section 269F). The CEO must ensure that the application meets the core criteria, particularly that no substitutable goods are produced in Australia in the ordinary course of business (section 269C). For the purposes of this concession, 'substitutable goods' are defined as those produced in Australia that could be used in place of the goods in question (section 269D and 269E).
The obligations under the Customs Act 1901 for the CEO include the assessment of the application against the core criteria and the publication of a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). In this case, no submissions were received, indicating no objections to the concession. The CEO's role also involves ensuring that the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the concession was registered (subsection 269S(1)). This ensures that the rights of importers are protected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Should any party breach the conditions set out in the Tariff Concession Instrument No. 0834253, they may face legal consequences. The Act does not explicitly state the penalties for breach, but given the nature of customs duties, it is likely that penalties would align with those for general breaches of customs regulations. Such penalties could include fines and other civil or criminal sanctions as determined by the court. It is important for all parties involved to adhere strictly to the terms of the concession to avoid any potential legal repercussions.