EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0947041
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.
Karara Mining Limited applied for a TCO in respect of certain bearing housings on 03 December 2009.
Instrument
TCO No 0947041 was made on 26 February 2010. It declares that those certain bearing housings 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. 0947041 is taken to have come into force on 03 December 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. 0947041, enacted in 2010 under the Customs Act 1901, addresses the need to provide tariff concessions for specific goods that are not produced in Australia and for which no substitutable goods are available domestically. This instrument facilitates the application of a lower customs duty rate on the specified goods, aligning with the policy objective of encouraging trade by reducing import costs for certain items. The instrument was introduced by the Chief Executive Officer of Customs following an application from Karara Mining Limited for tariff concessions on certain bearing housings. The instrument specifies that these bearing housings are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with the general duty rate of 5% being reduced to free duty. The instrument became effective on the date the application was lodged, 03 December 2009, and did not result in any adverse effects on the rights of persons other than the Commonwealth, while potentially benefiting importers by allowing them to apply for duty refunds.
Scope and Application
The Tariff Concession Instrument No. 0947041, made under the Customs Act 1901, applies to Karara Mining Limited and specifically to certain bearing housings for which they have applied for a Tariff Concession Order (TCO). The instrument was made on 26 February 2010, following an application submitted by Karara Mining Limited on 03 December 2009. The TCO was issued as the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, thereby meeting the core criteria specified in the Act. This concession allows these specific bearing housings to benefit from a reduced customs duty rate, from the general 5% to free duty, as they are now subject to item 50 of Schedule 4 of the Customs Tariff Act 1995. The instrument has no retrospective effect and does not impose any liabilities or disadvantage any party other than the Commonwealth. The TCO became effective on the date the application was lodged, which was 03 December 2009, and does not affect any rights as at the date of registration.
Key Provisions
The Customs Act 1901, specifically under Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (section 269F). These orders apply a lower rate of customs duty to certain goods. If a person applies for a TCO in respect of goods, and the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs, the CEO must then determine if the application meets the core criteria outlined in section 269C. A TCO application meets these criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C).
Under the Act, several terms are defined to clarify the scope of the TCO scheme. For example, "goods produced in Australia" is defined in section 269D, "ordinary course of business" is defined in section 269E, and "substitutable goods" is defined in section 269E as goods produced in Australia that are put, or are capable of being put, to a use corresponding to the goods in question. If the CEO is satisfied that the application meets these criteria, they must make a written TCO order (section 269P(3)), which specifies the applicable item from Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved primarily rest on the CEO, who must ensure that any TCO applications are assessed against the core criteria. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. Any submissions received must be considered by the CEO. In this instance, Karara Mining Limited applied for a TCO on 3 December 2009 for certain bearing housings, and the CEO was satisfied that the application met the core criteria, resulting in TCO No. 0947041 being made on 26 February 2010.
In terms of offences and penalties, the Act does not explicitly outline penalties for non-compliance with TCO provisions. However, if the CEO does not adhere to the procedural requirements, such as failing to publish a notice in the Gazette or not considering valid submissions, this could potentially lead to legal challenges or administrative reviews. For the entities involved, failure to correctly apply for or use a TCO might result in the imposition of incorrect customs duties, which could lead to financial penalties or audits by customs authorities. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any new liabilities on these persons.