EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0921139
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.
Linak Australia Pty Ltd applied for a TCO in respect of certain geared type electric spindles on 22 June 2009.
Instrument
TCO No 0921139 was made on 11 September 2009. It declares that those certain geared type electric spindles 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 10%. 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. 0921139 is taken to have come into force on 22 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, governs the imposition of customs duties and the regulation of goods imported into and exported from Australia. One of its key provisions is the establishment of a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (CEO). The problem or gap this legislation aims to address is the facilitation of the import of goods that are not produced in Australia, thereby providing a lower rate of customs duty for such goods. The explanatory statement for Tariff Concession Instrument No. 0921139, enacted in 2010, highlights the process by which Linak Australia Pty Ltd applied for and received a TCO for certain geared type electric spindles. This instrument declares that these specific goods are subject to a free rate of duty, as no substitutable goods were produced in Australia at the time of application. The policy objective underpinning this legislation is to support Australian businesses by making certain imported goods more affordable, thus promoting competition and economic efficiency.
Scope and Application
The Tariff Concession Instrument No. 0921139, made under the Customs Act 1901, applies specifically to the concession of tariff rates for certain geared type electric spindles, as requested by Linak Australia Pty Ltd. This Instrument is applicable to the Commonwealth of Australia, and its purpose is to facilitate the import of specified goods by providing a lower rate of customs duty, in this case reducing the duty from 10% to free. The application of this Instrument is restricted to those goods for which the Chief Executive Officer of Customs determines that no substitutable goods are produced in Australia, aligning with the criteria set out in the Act. The Instrument does not extend to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions. The geographic reach of this legislation is national, impacting importers across Australia by providing them with the benefit of reduced duty rates on the specified goods, as well as the potential for duty refunds on imports made since the Instrument's effective date.
Key Provisions
The main operative sections of this legislation (Tariff Concession Instrument No. 0921139) concern the process and requirements for making Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F), the core criteria for approving a TCO application (section 269C), and the specific definitions related to these criteria (sections 269D, 269E, and 269F). Section 269P(3) dictates that if the core criteria are met, a TCO must be issued by the Chief Executive Officer (CEO) of Customs, specifying the applicable tariff item (item 50 of Schedule 4 to the Customs Tariff Act 1995). Additionally, section 269K(1) mandates the CEO to publish a notice in the Gazette inviting submissions on the TCO application, while section 269S(1) states that a TCO comes into force on the date the application was lodged.
The Act imposes several obligations and requirements on the parties involved. The CEO must first ensure that the application for a TCO does not pertain to goods specified in section 269SJ, which cannot be subject to a TCO. Once the CEO confirms that the application meets the core criteria outlined in section 269C, they must issue a written TCO. This process involves verifying that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D and 269E. The CEO is also required to publish a notice in the Gazette, inviting any interested parties to submit reasons why the TCO should not be made, as per section 269K(1).
The legislation outlines specific offences, penalties, and consequences for breaches. While the explanatory statement does not detail specific penalties for non-compliance with TCO provisions, breaches of related Customs Act provisions can result in penalties. For instance, knowingly making a false statement in a customs document can attract civil penalties of up to $22,200 and/or criminal penalties of up to 2 years imprisonment. Additionally, failure to comply with the requirements for a refund of duty under paragraph 126(1)(r) of the Regulations might result in administrative penalties or financial liabilities for importers. However, it is important to note that the TCO itself does not impose any liabilities on any person, as per the explanatory statement.
In summary, this legislation sets a clear framework for the issuance of Tariff Concession Orders, detailing the criteria for approval, the process for public consultation, and the effective date of the concession. It imposes specific duties on the CEO to ensure the validity of TCO applications and mandates public notice and opportunity for objection. While the explanatory statement does not provide explicit penalties for non-compliance with the TCO itself, related offences under the Customs Act can incur significant penalties.