EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0843778
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.
Iveco Trucks applied for a TCO in respect of certain chassis trucks 6X2 on 12 December 2008.
Instrument
TCO No 0843778 was made on 06 March 2009. It declares that those certain chassis trucks 6X2 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. 0843778 is taken to have come into force on 12 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 Tariff Concession Instrument No. 0843778, made in 2009 under the Customs Act 1901, addresses the need to facilitate the import of certain goods by granting tariff concessions. This instrument was introduced to provide relief by reducing or eliminating customs duty on specific items that are not produced in Australia and for which there are no suitable domestic alternatives. The instrument was enacted by the Chief Executive Officer of Customs, who is authorised to make Tariff Concession Orders (TCOs) in accordance with section 269F of the Customs Act. The policy objective is to ensure that the application of customs duties does not unduly burden importers of goods that are not produced domestically and for which there are no suitable substitutes, thereby encouraging trade and supporting economic efficiency.
The instrument was made after Iveco Trucks applied for a TCO for certain chassis trucks 6X2, and the CEO was satisfied that no substitutable goods were produced in Australia. Consequently, the CEO declared that these trucks are subject to a free duty rate as per item 50 of Schedule 4 of the Customs Tariff Act 1995. The instrument took effect from 12 December 2008, the date the application was lodged, and does not disadvantage any person or impose liabilities on anyone in relation to actions taken before its registration. Importers of the affected goods can benefit by applying for a refund of duty paid on imports since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically under Part XVA, authorises the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) that lower the customs duty on specified goods. The TCO process applies to individuals or entities that wish to seek a reduction in customs duty on particular goods. This is subject to the condition that no substitutable goods are produced in Australia at the time of the application. The geographic reach of this Act is national, as it pertains to the Commonwealth of Australia and its customs regulations. Notably, the Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ. The Tariff Concession Instrument No. 0843778, which was made on 6 March 2009, exemplifies the application of this Act by declaring that certain chassis trucks 6X2 are subject to a TCO, reducing their duty rate from 5% to free. The commencement of the TCO is deemed to be effective from the date the application was lodged, 12 December 2008. Importantly, the TCO does not impact the rights of any person as at the date of registration, ensuring that no person (other than the Commonwealth) is disadvantaged or incurs liabilities for actions taken prior to the registration date.
Key Provisions
The Customs Act 1901 (the Act) under Part XVA provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (the CEO). When a person applies for a TCO in respect of certain goods, the CEO must first ensure the goods are not specified in section 269SJ of the Act, which lists goods ineligible for TCOs (sections 269F and 269SJ). If the application is valid, the CEO then assesses whether it meets the core criteria under section 269C. This involves verifying that, on the day of the application, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively.
The obligations imposed by the Act on parties include the requirement for applicants to ensure their applications meet the specified criteria. The CEO must publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not be granted (subsection 269K(1)). Once a TCO is granted, it comes into force on the date the application was lodged, as stipulated in subsection 269S(1). The Act also mandates that the TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration (subsection 269S(2)). Importers benefit from this provision as they can apply for a refund of duty on goods imported since the TCO's effective date under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 can result in various penalties and consequences. While specific penalties are not detailed in the explanatory statement, breaches of the Act or associated regulations can lead to both civil and criminal penalties. Civil penalties may include fines and other monetary penalties, while criminal penalties could involve imprisonment, reflecting the seriousness with which breaches are treated under Australian law. The exact penalties depend on the nature and severity of the breach, with maximum penalties potentially varying based on the specific circumstances of the case.