EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0929596
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.
Freightquip Australia applied for a TCO in respect of certain shunting locomotive on 12 August 2009.
Instrument
TCO No 0929596 was made on 30 October 2009. It declares that those certain shunting locomotive 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. 0929596 is taken to have come into force on 12 August 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 a framework for the regulation of customs and excise, including the administration of customs duties and the facilitation of trade. Part XVA of the Act, introduced to address the need for tariff concessions, allows for the reduction or exemption of customs duties on certain goods through Tariff Concession Orders (TCOs). These orders are made by the Chief Executive Officer of Customs and apply to goods for which no substitutable goods are produced in Australia. The instrument in question, Tariff Concession Instrument No. 0929596, was made on 30 October 2009, in response to an application by Freightquip Australia for a TCO concerning certain shunting locomotives. The instrument declares that these locomotives are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a free rate of duty, effective from 12 August 2009. The policy objective of this concession is to support the import of goods that are not domestically produced, thereby facilitating trade and potentially benefiting importers by allowing them to apply for duty refunds on imports since the effective date of the TCO.
Scope and Application
The Tariff Concession Instrument No. 0929596 applies to the goods, specifically certain shunting locomotives, that are subject to the application by Freightquip Australia, and is established under Part XVA of the Customs Act 1901. This Act allows for the application of a lower rate of customs duty for goods specified in a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs (CEO). The scope of the Act extends to any person who may apply for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act, which excludes certain goods from the tariff concession scheme. The Act applies on a Commonwealth level, and its jurisdictional reach is determined by the provisions of the Customs Act 1901. The TCO itself provides that the goods in question are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, as opposed to the general rate of 5%. The CEO is required to consult by publishing a notice in the Gazette inviting submissions on the TCO application, although in this instance, no submissions were received. The TCO is effective from the date of application, 12 August 2009, and does not affect the rights of any person, including the ability for importers to apply for a refund of duty on goods imported since the TCO came into force.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0929596 under the Customs Act 1901 (section 269F) involve the process through which a Tariff Concession Order (TCO) may be applied for and granted by the Chief Executive Officer of Customs (section 269P). The instrument allows for a lower rate of customs duty on goods that are the subject of a TCO, provided the application meets the core criteria as outlined in section 269C of the Act. Specifically, the application must be for goods that are not specified in section 269SJ, which details goods that cannot be subject to a TCO, and there must be no substitutable goods produced in Australia in the ordinary course of business at the time the application is lodged. Upon satisfaction that these criteria are met, the CEO must issue a written order that specifies the goods to which the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, effectively reducing the customs duty rate (subsection 269P(3)).
The obligations imposed by this Act primarily concern the process of applying for and issuing a TCO. The CEO must accept and consider any application for a TCO that complies with the statutory requirements (section 269F). The CEO must also determine whether the application meets the core criteria, including the absence of substitutable goods produced in Australia at the time of the application (section 269C). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be made, and to consider these submissions before making a final decision (subsection 269K(1)). The CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on such persons in respect of actions taken before the TCO comes into force (subsection 269S(1)).
Breaches of the requirements set out in the Customs Act 1901 can result in both civil and criminal consequences. While the specific offences and penalties are not detailed in the explanatory statement, under general provisions of the Act, unauthorised importation or exportation of goods can lead to fines and, in severe cases, imprisonment. For instance, section 136 of the Act provides for a maximum penalty of 10 years imprisonment for serious breaches involving deception or fraud. Furthermore, subsection 270(1) allows for fines of up to 10,000 penalty units for offences involving the importation of prohibited goods. The precise penalties would depend on the nature and severity of the breach, as well as any applicable legislative provisions.