EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0932406
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.
Futuris Automotive Interiors applied for a TCO in respect of certain steering column motor vehicle clocksprings on 02 September 2009.
Instrument
TCO No 0932406 was made on 20 November 2009. It declares that those certain steering column motor vehicle clocksprings 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. 0932406 is taken to have come into force on 02 September 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, establishes a framework within which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to reduce customs duty on specific goods. This legislative instrument was introduced to address the need for flexibility in tariff regulations, allowing for reduced duty rates on goods where appropriate, thereby promoting trade and economic efficiency. Specifically, TCOs are intended to apply to goods for which no substitutable products are produced domestically, thus ensuring that the concession does not undermine local production. In the case of Tariff Concession Instrument No. 0932406, the instrument was made to provide a tariff concession for certain steering column motor vehicle clocksprings, effectively reducing the duty rate from 5% to free, as no substitutable goods were being produced in Australia at the time of application. The process involved public consultation, which in this instance did not yield any submissions opposing the concession, leading to the issuance of the TCO which came into effect on the date of the application.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the mechanism through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These TCOs provide for a reduced rate of customs duty on specific goods, provided that certain criteria are met. The Act applies to any person or entity seeking a tariff concession for goods that are not produced in Australia and do not have substitutable goods available domestically. The application process requires the applicant to demonstrate that the goods in question are not produced in Australia in the ordinary course of business, and that there are no substitutable goods that could serve the same purpose as the imported goods. If the CEO is satisfied that the application meets these criteria, a TCO is issued, effectively applying a lower rate of duty to the specified goods. The scope of the Act is limited to the goods specified in the TCO, and it does not affect any existing rights or liabilities as of the date of the application, nor does it impose new liabilities on any person. The TCO is effective from the date the application was lodged, as per subsection 269S(1) of the Act.
Key Provisions
The Tariff Concession Order No 0932406, under section 269P of the Customs Act 1901 (the Act), was issued on 20 November 2009, in response to an application by Futuris Automotive Interiors. The Order declares that certain steering column motor vehicle clocksprings are eligible for a tariff concession, meaning they will be subject to a lower rate of customs duty. Specifically, these goods will now be subject to a duty rate of free, as opposed to the general rate of 5% specified in Schedule 4 of the Customs Tariff Act 1995. This concession is based on the Chief Executive Officer of Customs’ (the CEO) determination that no substitutable goods were produced in Australia at the time the application was lodged.
The obligations under the Customs Act 1901 for entities such as Futuris Automotive Interiors involve a detailed application process to the CEO, ensuring that the goods in question meet the core criteria outlined in section 269C. The CEO must verify that no substitutable goods were produced in Australia and that the application does not involve goods specified in section 269SJ, which are ineligible for tariff concessions. Moreover, the CEO is mandated to publish a notice in the Gazette (subsection 269K(1)) inviting any objections or submissions from interested parties. In this instance, no submissions were received, leading to the issuance of the TCO.
Failure to comply with the provisions of the Customs Act 1901 may result in significant legal consequences. While the Act does not explicitly detail penalties for non-compliance with tariff concession applications, breaches of customs regulations generally may incur both civil and criminal penalties. Civil penalties could include fines and the forfeiture of goods, while criminal penalties could result in imprisonment, reflecting the severity with which breaches are treated under Australian law. Additionally, there could be indirect consequences such as the loss of credibility and reputational damage for entities involved in non-compliance.