EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0937861
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.
Excel Undercarriage applied for a TCO in respect of certain excavator drive sprockets on 06 October 2009.
Instrument
TCO No 0937861 was made on 30 December 2009. It declares that those certain excavator drive sprockets 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. 0937861 is taken to have come into force on 06 October 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, provides a framework for the administration of customs and excise duties, including provisions for tariff concession orders (TCOs) under Part XVA. The 2010 Tariff Concession Instrument No. 0937861, issued by the Chief Executive Officer of Customs, was introduced to address the need for tariff concessions on specific goods that are not produced domestically. Excel Undercarriage applied for a TCO on certain excavator drive sprockets, which were granted a duty-free rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, following the CEO’s determination that no substitutable goods were produced in Australia. The instrument aims to ensure that Australian businesses can compete effectively by reducing the cost of importing these specific goods, without disadvantaging any existing rights or imposing new liabilities on non-Commonwealth entities. The TCO came into effect on the date the application was lodged, 6 October 2009, and no submissions were received against the concession.
Scope and Application
The Customs Act 1901 governs the application process for Tariff Concession Orders (TCO) which can lower the customs duty on specific goods, provided the conditions set out in the Act are met. A TCO can be applied for by any person regarding goods that are not listed in section 269SJ of the Act as ineligible. The Chief Executive Officer of Customs must then determine whether the application meets the core criteria, which includes ensuring that no substitutable goods are produced in Australia at the time of the application. If the criteria are satisfied, a TCO is issued, effective from the date the application was lodged. The Act applies to any individual or entity seeking tariff concessions for goods, impacting the import duties of those goods. The geographic scope is national, as it involves federal legislation. However, the Act does not disadvantage any person other than the Commonwealth nor impose liabilities on any person for actions taken before the TCO is registered. The Act may extend or restrict its application through subordinate instruments, ensuring a flexible approach to tariff concessions.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0937861 under the Customs Act 1901 (the Act) pertain to the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (the CEO) (s 269F). Specifically, section 269C sets out the core criteria that an application for a TCO must meet, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (s 269C, s 269D, s 269E). If these criteria are met, the CEO must issue a written order, a TCO, that specifies the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (s 269P(3)). For the excavator drive sprockets in question, this TCO, numbered 0937861, was made on 30 December 2009, declaring that the goods in question are subject to item 50 of Schedule 4 of the Tariff, with a rate of duty of free instead of the general rate of 5% (s 269P(3)).
The obligations and requirements imposed by this Act on the parties it governs are primarily centred around the application process for a TCO and the subsequent decision-making process by the CEO. Any person wishing to apply for a TCO must do so in accordance with section 269F of the Act, ensuring that their application is not in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Once an application is deemed valid, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be made to submit their reasons to the CEO (s 269K(1)). The CEO must then decide whether the application meets the core criteria as set out in section 269C. If the criteria are met, the CEO is required to make a written TCO (s 269C, s 269P(3)).
The Act also outlines potential consequences for breaches of its provisions. While specific offences and penalties are not detailed in the explanatory statement, the Act's framework suggests that any failure to comply with the requirements for making a TCO, or any fraudulent application process, could lead to legal repercussions. Although the explanatory statement does not detail specific penalties, breaches of similar provisions under the Customs Act 1901 can attract significant civil and criminal penalties. For instance, knowingly making a false statement in an application could lead to fines of up to $22,200 for individuals and $111,000 for corporations, along with potential criminal charges and imprisonment. Similarly, failure to comply with notice and submission requirements could result in administrative penalties and legal challenges to the validity of any TCO issued.