EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0931866
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.
Boyne Smelters Limited applied for a TCO in respect of certain smelter crane and tool trolley parts on 28 August 2009.
Instrument
TCO No 0931866 was made on 20 November 2009. It declares that those certain smelter crane and tool trolley 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. 0931866 is taken to have come into force on 28 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, enacted by the Parliament of Australia, introduces a framework for Tariff Concession Orders (TCOs) under Part XVA, which aims to provide relief on customs duties for certain goods. This legislative instrument was designed to address the problem of imposing unnecessary tariffs on goods that cannot be readily substituted by Australian-produced alternatives. The policy objective behind the TCOs is to facilitate the importation of goods that are not domestically produced, thereby supporting industries that rely on imported components or materials. The Chief Executive Officer of Customs has the authority to make these orders based on applications, provided that no substitutable goods are produced in Australia in the ordinary course of business. The application process and the criteria for making these orders are clearly outlined in the Act, ensuring a transparent and fair mechanism for importers to seek tariff concessions.
Scope and Application
The Tariff Concession Instrument No. 0931866 under the Customs Act 1901 applies specifically to the application process for Tariff Concession Orders (TCOs), which allows for a lower rate of customs duty on certain imported goods. This legislation pertains to any person or entity that applies to the Chief Executive Officer of Customs for a TCO on goods, provided that the goods do not fall within the exclusions set out in section 269SJ of the Act. The Act applies to the entire Commonwealth of Australia, ensuring uniformity in the application of tariff concessions across the country. However, certain goods are excluded from this scheme as per section 269SJ, which details the goods that cannot be subject to a TCO. The application process mandates that if no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a TCO if the application meets the core criteria set out in the Act.
The TCO No. 0931866, which was applied for by Boyne Smelters Limited for certain smelter crane and tool trolley parts, exemplifies the application of this legislation. The instrument was registered on 20 November 2009 and declared that the specified parts are subject to a free rate of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995. This tariff concession became effective from 28 August 2009, the date on which the application was lodged. The instrument ensures that no person other than the Commonwealth is disadvantaged or imposed liabilities regarding actions taken before the registration date.
Key Provisions
The Tariff Concession Order (TCO) No. 0931866, under section 269F of the Customs Act 1901, applies a lower rate of customs duty to certain smelter crane and tool trolley parts, setting it at free rather than the general rate of 5% (section 269P(3)). This concession is contingent on the Chief Executive Officer of Customs (CEO) being satisfied that no substitutable goods were produced in Australia on the date the application was lodged, and that the application meets the core criteria outlined in section 269C. This involves confirming that the goods, as defined under section 269D, are not being produced domestically in the ordinary course of business as per section 269E, and that there are no substitutable goods, as defined in section 269B. The TCO came into effect on 28 August 2009, the date the application was made, as per subsection 269S(1) of the Act.
Obligations imposed by the Act on parties include the requirement for applicants to submit detailed applications to the CEO, who must then verify that the application meets the core criteria, including the non-existence of substitutable goods produced in Australia. The CEO is also mandated to publish a notice in the Gazette inviting submissions from any interested parties, although in this case, no submissions were received. Additionally, the Act requires the CEO to ensure that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on such persons for actions taken prior to the TCO's registration.
Breaches of the Customs Act 1901 that relate to the making and application of TCOs can result in both civil and criminal penalties. While the explanatory statement does not specify particular penalties for breaches related to TCOs, the Act generally allows for fines and imprisonment for various customs-related offences. For instance, knowingly making a false statement in an application or declaration can lead to penalties of up to $22,000 or imprisonment for up to two years, or both, under section 236 of the Act. Additionally, failure to comply with a requirement of the Act can result in fines and imprisonment, with the severity of the penalty depending on the nature and extent of the breach.