EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0921432
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.
Mount Isa Mines Steel applied for a TCO in respect of certain dual skip winder dc motors on 23 June 2009.
Instrument
TCO No 0921432 was made on 11 September 2009. It declares that those certain dual skip winder dc motors 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. 0921432 is taken to have come into force on 23 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 Tariff Concession Instrument No. 0921432, enacted under the Customs Act 1901, addresses the need for tariff concessions for specific goods that are not produced in Australia and for which there are no suitable substitutes. This instrument, introduced to streamline the process of reducing customs duties on certain imported goods, was made by the Chief Executive Officer of Customs following an application from Mount Isa Mines Steel for tariff concessions on certain dual skip winder DC motors. The policy objective is to facilitate the import of goods that are not domestically produced and do not have local substitutes, thereby encouraging trade and potentially lowering costs for businesses that rely on such imports. The instrument ensures that the rights of importers are preserved and potentially improved, allowing them to apply for duty refunds on goods imported since the date the concession was taken to have come into effect.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides the framework for the creation of Tariff Concession Orders (TCO) which are orders that reduce the customs duty payable on certain goods. The Act applies to any person or entity who wishes to apply for a TCO in respect of goods, provided those goods do not fall within the exclusions specified in section 269SJ. The application process requires the Chief Executive Officer of Customs (CEO) to determine if the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business. If the CEO is satisfied that the core criteria are met, they must make a TCO. The geographic reach of this Act is national, as it pertains to the importation of goods into Australia. The application of TCOs does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the date of registration of the TCO. The rights of importers are beneficially affected by these orders, allowing them to apply for a refund of duty on imported goods since the effective date of the TCO. The application of the Act can be extended or restricted through subordinate instruments, which may specify further details or conditions for the concession.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes a framework whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (s 269F). A TCO allows for a lower rate of customs duty on goods that meet the specified criteria. An individual or entity may apply to the CEO for a TCO for certain goods (s 269F). If the CEO determines that the application does not pertain to goods listed in section 269SJ, which are ineligible for a TCO, the CEO must then assess whether the application satisfies the core criteria (s 269C).
The core criteria require that on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). The definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, a written TCO is issued, declaring the goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies (s 269P(3)).
For the specific case of TCO No. 0921432, issued on 11 September 2009, it pertains to certain dual skip winder dc motors, which are now subject to item 50 of Schedule 4 to the Tariff, resulting in a duty rate of free instead of the general rate of 5%. The CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be issued (s 269K(1)). In this instance, no submissions were received. The TCO comes into effect on the date the application was lodged, which was 23 June 2009 (s 269S(1)). Importantly, the TCO does not adversely affect the rights of any person, other than the Commonwealth, and does not impose any liabilities on any person in relation to actions taken before the TCO was issued.
In terms of penalties, the Act does not specify penalties for failing to comply with the requirements of a TCO. However, general provisions in the Customs Act 1901 provide for various civil and criminal penalties for breaches of customs laws. These can include fines and imprisonment, depending on the nature and severity of the breach. For example, under section 256, a person who contravenes a provision of the Act is liable to a penalty of up to 10,000 penalty units for an individual and 50,000 penalty units for a body corporate, as well as potential imprisonment terms. The specific penalties applicable would depend on the precise nature of the breach in relation to the TCO provisions.