EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0905366
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.
Bgc Australia applied for a TCO in respect of certain silo discharge and truck loading system on 17 February 2009.
Instrument
TCO No 0905366 was made on 15 May 2009. It declares that those certain silo discharge and truck loading system 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. 0905366 is taken to have come into force on 17 February 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, was amended to introduce the scheme for Tariff Concession Orders (TCOs) under Part XVA. This was introduced to address the gap in allowing certain goods to benefit from lower rates of customs duty, provided they meet specific criteria and do not have substitutable goods produced domestically. The aim was to foster economic benefits by reducing costs for businesses importing these goods. The Tariff Concession Instrument No. 0905366, issued on 15 May 2009, exemplifies this scheme. It was made after Bgc Australia applied for a TCO for certain silo discharge and truck loading systems on 17 February 2009, and after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia. This instrument effectively grants a free rate of duty on these specified goods, instead of the general 5% rate, thereby benefiting importers who can also apply for duty refunds for goods imported since the TCO’s effective date.
Scope and Application
The Tariff Concession Instrument No. 0905366, made under the Customs Act 1901, applies to specific goods, namely certain silo discharge and truck loading systems, by granting them tariff concessions. The Act enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) for goods that are not produced in Australia in the ordinary course of business and for which substitutable goods are not available domestically. This instrument specifically addresses the application by Bgc Australia for a TCO concerning these particular goods, resulting in a reduction of customs duty from the general rate of 5% to free duty. The instrument came into effect on 17 February 2009, the date the application was lodged, and applies nationally across Australia, within the Commonwealth jurisdiction. The Act ensures that the TCO does not adversely affect any rights of persons other than the Commonwealth, nor does it impose any liabilities on such persons. Instead, it benefits importers by allowing them to apply for refunds of duties on goods imported since the effective date of the TCO. The instrument does not specify exclusions, exemptions, or thresholds beyond those outlined in the Customs Act 1901 and the Customs Tariff Act 1995. The CEO's decision to issue the TCO was made without any submissions from interested parties, indicating no opposition to the concession.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0905366, made under the Customs Act 1901, establish the conditions under which the Chief Executive Officer of Customs (CEO) can grant Tariff Concession Orders (TCOs) for specific goods. According to section 269C, a TCO application is eligible if no substitutable goods are being produced in Australia on the day the application is lodged (subsection 269P(3)). This means that the goods in question cannot have a locally-made equivalent that serves the same purpose. If the CEO determines that the application meets these criteria, they are required to issue a written order, as stipulated in section 269F, which specifies the goods to which the concession applies (subsection 269P(3)).
The obligations imposed by the Act on the CEO include assessing whether the application for a TCO meets the core criteria (section 269C) and ensuring that a notice inviting submissions is published in the Gazette if the application is accepted (subsection 269K(1)). The CEO must also consider any submissions received in response to the published notice before making a final decision on the application. For the purposes of this specific TCO, the CEO was satisfied that the application for the silo discharge and truck loading system met the core criteria, as no substitutable goods were being produced in Australia on the date the application was lodged.
Failure to comply with the requirements of the Customs Act 1901, such as incorrectly assessing an application for a TCO, can lead to various consequences. While the specific legislation does not detail penalties for non-compliance, breaches of the Customs Act 1901 generally attract criminal penalties, including fines and imprisonment. The maximum penalty for contravening the Act can reach up to 10,000 penalty units or imprisonment for five years, or both, depending on the severity of the breach. Civil penalties may also apply for non-compliance with the regulations, which could include fines up to 11,000 penalty units for corporations and 2,200 penalty units for individuals.