EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0902634
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.
Baulderstone Hornibrook applied for a TCO in respect of certain hydraulic motors on 27 January 2009.
Instrument
TCO No 0902634 was made on 24 April 2009. It declares that those certain hydraulic motors 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. 0902634 is taken to have come into force on 27 January 2009.
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 Australian Parliament, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This legislation aims to address the issue of potentially unfair customs duty rates by allowing for tariff concessions under certain conditions. Specifically, the Customs Act 1901 enables the application for TCOs when certain criteria are met, such as the absence of substitutable goods produced in Australia. The objective is to ensure that the application of duty does not disadvantage Australian businesses by providing a mechanism to lower duty rates for goods where no locally produced alternatives exist. The Tariff Concession Instrument No. 0902634, for example, was enacted to provide a tariff concession for specific hydraulic motors, reducing the duty rate from 5% to free, reflecting the policy objective of promoting fair competition and supporting the importation of goods where local production is not viable.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aiming to lower the customs duty rate on specified goods. A TCO can be applied for by any person concerning goods that are not listed in section 269SJ, which excludes certain goods from this scheme. If the CEO determines that the application meets the core criteria, specifically if no substitutable goods are produced in Australia in the ordinary course of business, a TCO will be issued. This instrument applies to the goods specified in the application and comes into effect from the date the application is lodged. The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed, though in the case of TCO No. 0902634, no such submissions were received. The TCO does not retroactively affect the rights of any person other than the Commonwealth, ensuring that any liabilities or rights are only prospective from the date of registration. This legislative framework allows for the targeted reduction of customs duties on goods, provided they meet the specified criteria and do not displace the rights or impose liabilities on other persons.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0902634, which amends the Customs Act 1901, involve the establishment of Tariff Concession Orders (TCOs) under section 269F (subsections 269C and 269P(3)). These sections outline the conditions and process for the Chief Executive Officer of Customs (the CEO) to grant a TCO. A TCO is made when the CEO is satisfied that the application for tariff concessions meets the core criteria, specifically that no substitutable goods are produced in Australia on the day the application was lodged (section 269C). If the CEO is satisfied with the application, they must issue a written order (a TCO) that declares the goods in question to be subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a reduced rate of customs duty or making the goods duty-free (subsection 269P(3)).
The obligations imposed by the Act on the parties it governs are primarily procedural. An applicant must submit a valid application to the CEO for a TCO, ensuring that the application is not in respect of goods specified in section 269SJ of the Act. Once the CEO accepts the application, they must publish a notice in the Gazette inviting submissions from any person who might have reasons why the TCO should not be made (subsection 269K(1)). The CEO must consider these submissions before making a decision. The CEO is also required to decide whether the application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia on the day the application was lodged (section 269C).
There are no explicit offences or penalties stated in the explanatory statement for breach of the provisions of the Customs Act 1901 as it pertains to TCOs. However, failure to comply with the requirements of the Act, such as incorrectly applying for a TCO for goods that cannot be subject to such an order or not adhering to the stipulated process, could result in legal consequences. These may include challenges to the validity of the TCO, disputes over duty refunds, or potential civil or administrative penalties for incorrect or fraudulent applications. The specific consequences would depend on the nature and extent of the breach, as well as the applicable laws and regulations at the time.