EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0919385
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.
Moly Metals Pty Ltd applied for a TCO in respect of certain grinding mill parts on 09 June 2009.
Instrument
TCO No 0919385 was made on 04 September 2009. It declares that those certain grinding mill parts 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. 0919385 is taken to have come into force on 09 June 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 was enacted to provide for the administration of customs and excise duties and the regulation of goods imported into or exported out of Australia. It was introduced to address the need for a structured approach to the regulation and taxation of imported and exported goods. The Tariff Concession Instrument No. 0919385, made under the authority of the Customs Act 1901, is an example of how the Act provides flexibility in tariff application. This specific Instrument was introduced by the Parliament of Australia to address the application by Moly Metals Pty Ltd for tariff concessions on certain grinding mill parts. The policy objective of this Instrument, as with others under the Act, is to facilitate the importation of goods that are not produced in Australia, thereby supporting industries that rely on imported components and materials. The Instrument ensures that the rights of importers are protected and that no new liabilities are imposed on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs may grant a lower rate of customs duty on specific goods. These orders apply to entities or individuals who apply for tariff concessions on goods that are not specified in section 269SJ of the Act and meet the core criteria as outlined in section 269C. A key criterion is that no substitutable goods were produced in Australia in the ordinary course of business at the time the application is lodged, as defined by sections 269D and 269E. If the CEO determines that the application meets these criteria, a TCO is made, and the goods specified in the order are subject to a reduced customs duty rate as detailed in Schedule 4 of the Customs Tariff Act 1995. The TCO applies nationally and becomes effective on the date the application is lodged. Importantly, the TCO does not retroactively affect the rights or liabilities of any person other than the Commonwealth, nor does it impose new liabilities on any party.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 0919385 under the Customs Act 1901 (section 269F) allow for the application by a person for a Tariff Concession Order (TCO) in respect of specific goods, provided they do not fall under the categories of goods listed in section 269SJ that are ineligible for a TCO. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, they must make a written order (section 269P(3)). The instrument specifies that certain grinding mill parts are subject to a TCO as they are deemed to be goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, with the duty rate set at free, down from the general rate of 5%.
The Act imposes several obligations on the parties involved. The CEO is required to assess whether the application for a TCO meets the core criteria, specifically whether no substitutable goods were produced in Australia in the ordinary course of business at the time of the application (section 269C). This includes ensuring that the definitions of 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' as outlined in sections 269D, 269E, and the relevant sections of the Customs Act are applied correctly. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who might oppose the TCO (subsection 269K(1)).
Failure to comply with the provisions of the Customs Act and the associated Regulations can result in various consequences. While the specific offences and penalties are not detailed in the explanatory statement, under Australian law, breaches of customs regulations can lead to both civil and criminal penalties. Civil penalties can include fines, while criminal penalties may include imprisonment, depending on the severity and intent behind the breach. The exact penalties would be determined by the relevant court based on the specifics of the case and the relevant statutory provisions.
The TCO does not retroactively affect the rights of any person, ensuring that no one (except the Commonwealth) is disadvantaged or subjected to liabilities for actions taken before the date of the TCO's registration (subsection 269S(1)). Importers stand to benefit from the TCO, as they can apply for a refund of duty on goods imported since the TCO is deemed to have come into force. This benefit underscores the intent of the legislation to provide relief and support to importers without imposing additional burdens or liabilities on them.