EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0939364
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.
Toyota Material Handling Australia applied for a TCO in respect of certain ride on towing tractors on 20 October 2009.
Instrument
TCO No 0939364 was made on 15 January 2010. It declares that those certain ride on towing tractors 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. 0939364 is taken to have come into force on 20 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 Tariff Concession Instrument No. 0939364, enacted under the Customs Act 1901, was introduced to address the issue of applying tariff concessions to specific goods, in this case, certain ride-on towing tractors, manufactured by Toyota Material Handling Australia. This instrument was formulated to facilitate tariff reductions and economic benefits for importers of these goods by reducing the customs duty from the general rate of 5% to a free rate, provided that no substitutable goods were produced in Australia. The instrument was created to ensure that the application for such tariff concessions met the core criteria as stipulated in the Act, specifically ensuring that the goods in question were not substitutable by any goods produced domestically. The policy objective behind this legislation is to foster economic efficiency and competitiveness by allowing for lower tariffs on imported goods where there is no domestic production of similar goods.
The instrument was enacted by the Chief Executive Officer of Customs, following a successful application by Toyota Material Handling Australia on 20 October 2009, and was published in the Gazette on 15 January 2010. The process included an invitation for any interested parties to provide submissions, although none were received. The tariff concession came into effect on the date of the application, 20 October 2009, and provides for potential duty refunds to importers for goods imported since that date, without imposing any liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, as amended through Tariff Concession Instrument No. 0939364, applies to specific goods that are the subject of a Tariff Concession Order (TCO), which in this case are certain ride-on towing tractors. The Act permits the Chief Executive Officer of Customs to make a TCO, effectively reducing the rate of customs duty on specified goods to zero, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. The instrument applies to any person or entity involved in the importation of these goods, and it operates under the jurisdiction of the Commonwealth. Notably, the Act does not impose any liabilities on individuals or entities other than the Commonwealth for actions taken before the TCO's effective date, and it allows for the possibility of duty refunds for importers who have already paid duties on the affected goods since the TCO's commencement date. The Act extends its application through subordinate instruments, which can further detail the process and specific conditions under which the TCO is granted.
Key Provisions
The main operative sections of the legislation, particularly under the Customs Act 1901, revolve around the establishment and implementation of Tariff Concession Orders (TCOs). Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO, which can result in a lower rate of customs duty for the specified goods. Section 269C sets forth the core criteria that the CEO must consider when determining whether to grant a TCO, focusing on whether substitutable goods are produced in Australia. Section 269B clarifies the definitions of key terms used in the evaluation of a TCO application, such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." Upon meeting the core criteria, the CEO is required under section 269P(3) to issue a written order (the TCO) that specifies the lower rate of customs duty applicable to the goods in question.
The obligations imposed by the Act on the parties involved are primarily directed at the CEO of Customs. The CEO must ensure that any TCO application is assessed against the core criteria outlined in section 269C. This involves verifying that no substitutable goods are being produced in Australia. Furthermore, the CEO is required to publish a notice in the Gazette, as per subsection 269K(1), inviting any interested parties to submit objections to the proposed TCO within a specified timeframe. This ensures a degree of transparency and public participation in the decision-making process. Additionally, the CEO must ensure that the TCO does not disadvantage any persons, other than the Commonwealth, who were engaged in activities prior to the registration of the TCO.
The legislation also delineates the potential consequences of non-compliance. While the explanatory statement does not explicitly detail civil or criminal penalties for breaches of the Act in the context of TCOs, it is reasonable to infer that any failure to comply with the provisions could lead to legal repercussions. Typically, breaches of the Customs Act 1901 can result in civil penalties, such as fines, or criminal penalties, which may include imprisonment, depending on the severity and intent of the breach. The specific penalties would be determined by the applicable sections of the Customs Act and any related regulations, but they underscore the importance of adherence to the established procedures and criteria for TCOs.