EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0920873
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.
BHP Pty Ltd applied for a TCO in respect of certain electic locomotives on 17 June 2009.
Instrument
TCO No 0920873 was made on 04 September 2009. It declares that those certain electic locomotives 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. 0920873 is taken to have come into force on 17 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, enacted by the Australian Parliament, is a comprehensive statute that governs the regulation and administration of customs and excise in Australia. One significant component of the Act is Part XVA, which facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These TCOs allow for a reduced rate of customs duty on specific goods, provided certain criteria are met. This legislative framework was introduced to address the need for flexibility in customs duty rates, enabling economic benefits for importers and manufacturers by lowering the cost of imported goods that do not have Australian-made equivalents. The policy objective is to encourage the importation of goods that are not produced domestically, thereby promoting competition and consumer choice while also supporting industries that rely on imported components. The process involves an application to the CEO, who must determine if the application meets the core criteria, including the absence of substitutable goods produced in Australia, before issuing a TCO.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which may be issued by the Chief Executive Officer of Customs (CEO). This legislation applies to any person or entity that seeks to import goods into Australia and qualifies under the specified conditions, which primarily involve the importation of goods for which no substitutable goods are produced in Australia. The application process requires the applicant to demonstrate that the goods in question are not listed in section 269SJ of the Act, which includes goods that cannot be subject to a TCO. If the CEO determines that the application meets the core criteria set out in sections 269C and 269D of the Act, a TCO is issued, thereby applying a lower rate of customs duty to the specified goods. The application and issuance of TCOs are subject to Commonwealth jurisdiction, and the rights of persons other than the Commonwealth are protected under the Act to ensure no disadvantage or imposition of liabilities for actions prior to the TCO's registration. The Explanatory Statement detailing TCO No. 0920873 for certain electric locomotives exemplifies this process, demonstrating the CEO's role in determining tariff concessions and the subsequent impact on import duties.
Key Provisions
The Tariff Concession Instrument No. 0920873, under the Customs Act 1901, establishes a scheme allowing the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) (s 269F). When a TCO is issued, it applies a lower rate of customs duty to the specified goods, in this case, certain electric locomotives. For BHP Pty Ltd’s application, the TCO was made on 4 September 2009, and it declared that the specified electric locomotives are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the rate of duty reduced from 5% to free (s 269P(3)).
The Act imposes specific obligations on both the applicant and the CEO in the process of issuing a TCO. Firstly, the applicant must apply to the CEO for a TCO concerning goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO (s 269F). Secondly, the CEO must assess whether the application meets the core criteria, which include verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (s 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe there are reasons why the TCO should not be made (s 269K(1)).
Breaching the requirements set forth by the Customs Act 1901 can result in significant penalties and consequences. If an individual or entity does not comply with the Act’s provisions or if a TCO is issued improperly, they may face legal action. The specific penalties for breaches are not detailed in the Explanatory Statement but could include fines or other sanctions as determined by the relevant courts. The Act ensures that the rights of importers are protected and that no one other than the Commonwealth is disadvantaged or subjected to liabilities due to the TCO (s 269S(1)). Therefore, it is crucial for all parties to adhere to the Act’s provisions to avoid potential legal repercussions.