EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0909950
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.
Downer Edi Rail Pty Ltd applied for a TCO in respect of certain lightning arrestors passenger train on 25 March 2009.
Instrument
TCO No 0909950 was made on 05 June 2009. It declares that those certain lightning arrestors passenger train 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. 0909950 is taken to have come into force on 25 March 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 Parliament of Australia, establishes a framework for the regulation of imports and exports, including provisions for tariff concession orders (TCOs) that can provide reduced rates of customs duty on specified goods. The primary problem this legislation addresses is the potential economic disadvantage faced by Australian businesses when importing goods for which there are no locally produced alternatives, thereby encouraging the development of domestic production capabilities. Tariff Concession Instrument No. 0909950, introduced in 2009, is an example of this legislative framework in action, specifically providing relief for Downer Edi Rail Pty Ltd in relation to certain lightning arrestors for passenger trains. The instrument was issued after it was determined that no substitutable goods were produced in Australia, and the policy objective was to ensure that the rights and benefits of such tariff concessions do not adversely affect any existing rights of third parties, while positively impacting importers by potentially allowing them to claim refunds on duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, through its Part XVA, governs the application of Tariff Concession Orders (TCO) which allow for reduced customs duty on specific goods. This legislation applies to any entity or person who submits an application to the Chief Executive Officer of Customs (CEO) for a TCO, provided the goods in question do not fall under the exclusions specified in section 269SJ of the Act. The Act imposes a requirement that for an application to meet the core criteria and be approved, there must be no substitutable goods produced in Australia on the day the application is lodged. This criterion is outlined in section 269C of the Act. The CEO is mandated to make a written order, the TCO, if satisfied that the application meets the stipulated criteria, thereby applying a prescribed rate of duty from the Customs Tariff Act 1995. The application of the TCO is effective from the date the application is lodged as per subsection 269S(1) of the Customs Act. The CEO is also required to publish a notice in the Gazette, inviting submissions from interested parties, although in this case, no submissions were received. This process ensures that the application of TCOs is transparent and considers all relevant stakeholders before implementation.
Key Provisions
The main operative sections of the Customs Act 1901, particularly as they relate to Tariff Concession Orders (TCOs), include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. Section 269F allows for an application to the Chief Executive Officer (CEO) of Customs for a TCO in respect of specific goods, provided those goods are not listed in section 269SJ, which outlines goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria (as defined in section 269C), a TCO can be made, declaring the goods to which a prescribed tariff item applies (section 269P(3)). The definitions of key terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269B, 269D, and 269E respectively.
The Customs Act 1901 imposes several obligations and requirements on the parties involved. For instance, the CEO of Customs must determine whether an application for a TCO meets the core criteria as outlined in section 269C. This involves assessing whether no substitutable goods were produced in Australia on the day the application was lodged. Additionally, once a TCO application is accepted as valid, the CEO is required under subsection 269K(1) to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made. These obligations ensure a transparent and inclusive process for making TCOs.
Failing to comply with the provisions of the Customs Act 1901, particularly in relation to the issuance and application of TCOs, can lead to various consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally can result in civil or criminal penalties under the Act. Civil penalties can include fines, and in more severe cases, criminal penalties may be imposed, including imprisonment. The exact penalties depend on the nature and severity of the breach, as defined under the relevant sections of the Customs Act 1901 and associated regulations. The Act ensures that there are consequences for non-compliance to maintain the integrity and effectiveness of the customs duty system.