EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0927028
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.
Hitachi Construction Australia applied for a TCO in respect of certain earth mover and or excavator transmission parts on 28 July 2009.
Instrument
TCO No 0927028 was made on 16 October 2009. It declares that those certain earth mover and or excavator transmission 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. 0927028 is taken to have come into force on 28 July 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 Commonwealth Parliament, establishes a framework for tariff concession orders (TCOs) which are administered by the Chief Executive Officer of Customs. The primary purpose of this legislation is to facilitate the importation of specific goods at reduced customs duty rates by applying the concessions to goods that are not substitutable with locally produced items. This mechanism aims to support industries by reducing costs for imported components that do not have local alternatives. The explanatory statement concerning Tariff Concession Instrument No. 0927028, made under this Act, illustrates its application in a practical context. For instance, it details how Hitachi Construction Australia successfully applied for a TCO on certain earth mover and excavator transmission parts, resulting in a tariff reduction from 5% to free. The process underscores the objective of easing financial burdens on businesses that rely on importing non-substitutable goods, thereby promoting competitive practices in the Australian market.
Scope and Application
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. Specifically, Part XVA of the Act allows for the reduction of customs duty rates on certain goods through a TCO, provided the goods meet the core criteria outlined in the Act. A TCO applies to goods specified in an application, which must be lodged with the CEO by a person or entity. The CEO evaluates whether the application meets the core criteria, which include the condition that no substitutable goods were produced in Australia at the time of application. If satisfied, the CEO issues a TCO that specifies the reduced duty rate applicable to the goods. This Act applies across the Commonwealth of Australia, affecting entities and individuals involved in the importation of the specified goods.
The application of this legislation is restricted to goods that do not correspond to those listed in section 269SJ of the Act, which cannot be subject to a TCO. Moreover, the Act allows for further specification and regulation through subordinate instruments, although these are not detailed in the provided explanatory statement. The TCO does not disadvantage any person other than the Commonwealth and does not impose liabilities for actions taken prior to the effective date of the order. Importers stand to benefit from the TCO by potentially applying for duty refunds on goods imported since the effective date of the order.
Key Provisions
The primary sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO. Section 269C outlines the core criteria that a TCO application must meet, specifically that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods in question are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995. This order effectively provides a lower rate of duty, or in some cases, free duty on the specified goods.
Under the Act, the CEO is obligated to assess TCO applications against the core criteria set out in section 269C. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to lodge a submission (subsection 269K(1)). The CEO must consider any submissions received before making a final decision. For example, in the case of TCO No. 0927028, the CEO was satisfied that no substitutable goods were produced in Australia in the ordinary course of business concerning the specific earth mover and excavator transmission parts, and thus made the written order as required by section 269P(3).
The Act imposes certain obligations on the parties involved. The applicant for a TCO must ensure that their application meets the core criteria, particularly regarding the absence of substitutable goods produced in Australia. The CEO, on the other hand, must carefully evaluate the application against these criteria, consider any submissions, and make a decision in writing. Furthermore, the CEO is required to publish a notice in the Gazette to allow for public consultation. The TCO does not affect the rights of any person as at the date of registration, ensuring that existing rights are not disadvantaged or new liabilities imposed on individuals or entities other than the Commonwealth.
There are no specific offences, penalties, or civil/criminal consequences outlined in the Act for breach of the TCO provisions, but general legal consequences may apply for non-compliance with the Customs Act 1901. The Act provides for penalties, including fines and imprisonment, for various customs-related offences. For instance, subsection 254-10(2) of the Act specifies that a person who contravenes a provision of the Act or the regulations is liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both, for each offence. The precise penalties for non-compliance with specific TCO provisions would depend on the broader context of the Customs Act and any related regulations.