EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842566
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.
Andrew Engineering Pty Ltd applied for a TCO in respect of certain bogie removal system parts on 04 December 2008.
Instrument
TCO No 0842566 was made on 27 February 2009. It declares that those certain bogie removal system 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. 0842566 is taken to have come into force on 04 December 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 Parliament of Australia, includes provisions that enable the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) for specific goods, thereby reducing their customs duty rate. This legislative framework was designed to address the problem of ensuring that certain goods, particularly those that are not produced domestically, are accessible to Australian businesses and consumers at a lower cost. The Tariff Concession Instrument No. 0842566, introduced in 2009, exemplifies this process by granting a tariff concession to Andrew Engineering Pty Ltd for bogie removal system parts, effectively setting their duty rate at zero. The policy objective of this instrument is to facilitate the import of non-substitutable goods without imposing additional burdens or liabilities on non-Commonwealth entities, while also providing potential duty refunds to importers under certain conditions.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders are designed to apply a lower rate of customs duty to certain goods, provided the application meets the core criteria outlined in the Act. The core criteria are that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Substitutable goods are defined as those produced in Australia that can be used in the same way as the goods in question. The CEO must make a written order if satisfied that the application meets these criteria, and the goods are then subject to a specified item of Schedule 4 to the Customs Tariff Act 1995. The CEO must also publish a notice in the Gazette inviting any objections to the TCO, although in this case, no objections were received. The TCO comes into force on the date the application was lodged, with no retroactive effect on the rights of persons or imposition of liabilities for actions taken before the TCO was registered. Importers of the affected goods can apply for a refund of duty paid since the TCO's effective date. The application of the TCO is limited to the geographic jurisdiction of Australia and applies to entities or individuals importing the specified goods.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0842566 provide for the making of a Tariff Concession Order (TCO) by the Chief Executive Officer of Customs (CEO) in relation to certain bogie removal system parts, granting them a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995 (paragraphs 1-2). Section 269F of the Customs Act 1901 allows a person to apply for a TCO, and if the CEO is satisfied that the application meets the core criteria set out in section 269C (i.e., no substitutable goods were produced in Australia), the CEO must make a written TCO (section 269P(3)). This particular TCO applies to the goods specified by Andrew Engineering Pty Ltd, which were applied for on 04 December 2008 and made on 27 February 2009.
The Act imposes several obligations on the parties and entities it governs. Firstly, any person who wishes to apply for a TCO must ensure that their application meets the core criteria, particularly that no substitutable goods are produced in Australia in the ordinary course of business (section 269C). Secondly, the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge a submission if they believe the TCO should not be made (subsection 269K(1)). This process was followed in this case, but no submissions were received. Finally, the CEO must ensure that the TCO does not affect the rights of a person as at the date of registration so as to disadvantage that person or impose liabilities in respect of anything done or omitted to be done before the date of registration (subsection 269S(1)).
The Act does not specify any offences or penalties for breach of its provisions in relation to TCOs. However, it is possible that breaches of other sections of the Customs Act 1901 or the Customs Regulations 1993 could result in civil or criminal consequences, including fines and imprisonment. For example, section 246 of the Customs Act 1901 provides for a maximum penalty of $22,200 or five years imprisonment, or both, for knowingly making a false statement or representation in relation to customs or excise matters. Similarly, section 247 provides for a maximum penalty of $55,500 or 10 years imprisonment, or both, for contravening certain provisions of the Act or Regulations in relation to the importation or exportation of goods. It is important for parties and entities governed by the Act to ensure that they comply with all relevant provisions to avoid any potential consequences.