EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0843780
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 on 12 December 2008.
Instrument
TCO No 0843780 was made on 06 March 2009. It declares that those certain chassis trucks 6X6 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. 0843780 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 Customs Act 1901, enacted by the Parliament of Australia, provides a framework for the administration of customs and excise. It includes provisions for the creation of Tariff Concession Orders (TCOs) to lower the rate of customs duty on certain goods, as specified in the Act. The Customs Act 1901 was designed to address the need for streamlined customs duty processes for specific goods that meet certain criteria. The policy objective is to promote fair trade practices and provide economic benefits by reducing the duty on goods that are not produced domestically and have no substitutable goods available in Australia. As per the explanatory statement for Tariff Concession Instrument No. 0843780, Iveco Trucks applied for a TCO for certain chassis trucks on 12 December 2008, and the order was subsequently made on 6 March 2009, effective from the date of the application. The decision to grant the TCO was based on the Chief Executive Officer of Customs being satisfied that no substitutable goods were produced in Australia for the specified trucks, leading to a tariff concession that reduced the duty on these goods from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 0843780 under the Customs Act 1901 applies to certain chassis trucks, specifically 6X6 trucks, where the application for a Tariff Concession Order (TCO) was submitted by Iveco Trucks on 12 December 2008. The Act enables the Chief Executive Officer of Customs to make a TCO if specific criteria are met, including the absence of substitutable goods produced in Australia on the day the application was lodged. This order, effective from the date of application, grants these trucks a tariff concession, setting their duty rate to free, as opposed to the general rate of 5%. The legislation is designed to benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force. The Act's application is national and does not disadvantage any person or impose liabilities for actions taken before the TCO's effective date. The scope of the Act is further extended and specified through subordinate instruments, which define terms such as 'substitutable goods' and 'ordinary course of business', ensuring clarity and precision in its application.
Key Provisions
The Customs Act 1901, under Part XVA, provides for the creation of Tariff Concession Orders (TCOs) that allow for reduced customs duties on certain goods. Specifically, Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO regarding specific goods, provided they are not listed in Section 269SJ, which excludes certain goods from this scheme. If the application meets the core criteria as outlined in Section 269C, the CEO must proceed to make a TCO, as stipulated in Section 269P(3). This involves declaring that the specified goods will be subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995. For example, in the case of Iveco Trucks' application for a TCO on certain chassis trucks, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 0843780, which effectively reduced the duty on these trucks from 5% to free.
The obligations imposed by the Customs Act 1901 on the parties involved are primarily procedural. The CEO of Customs must ensure that any application for a TCO is assessed against the criteria set out in Section 269C, which includes verifying that no substitutable goods are produced in Australia at the time of application. Additionally, under Section 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to submit any objections to the proposed TCO. In the instance of TCO No. 0843780, no submissions were received in response to this invitation. Furthermore, the Act stipulates that the TCO should come into force on the day the application is lodged, as indicated in Section 269S(1). Importantly, the TCO does not retroactively affect any rights or impose any liabilities on individuals or entities for actions taken before the TCO's effective date.
In terms of penalties and consequences, the Act does not explicitly state penalties for non-compliance with the TCO process itself. However, broader compliance with customs legislation can lead to significant penalties. For instance, incorrect declarations or fraudulent activities in relation to customs duties can result in substantial fines and, in severe cases, criminal charges. The maximum penalties for breaches of customs legislation can include fines up to $22,000 per offence for individuals and significantly higher amounts for corporations, along with potential imprisonment. The specific enforcement of these penalties would depend on the nature and severity of the breach, but they underscore the importance of adhering to the statutory requirements set forth in the Customs Act 1901 and its subsidiary regulations.