EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0948450
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.
Xtek Ltd applied for a TCO in respect of certain explosive ordinance disposal vehicle parts on 11 December 2009.
Instrument
TCO No 0948450 was made on 05 March 2010. It declares that those certain explosive ordinance disposal vehicle 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. 0948450 is taken to have come into force on 11 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. 0948450, enacted in 2010, was introduced to address the need for tariff concessions on certain goods imported into Australia. This instrument is part of the broader Customs Act 1901, which empowers the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the rate of customs duty on specified goods. The objective of this particular TCO, applied to certain explosive ordinance disposal vehicle parts, was to ensure these critical components could be imported at a reduced duty rate, thereby supporting national security and operational efficiency without imposing undue financial burdens on importers. The instrument was developed in consultation with relevant stakeholders, as mandated by the Act, and came into effect on the date the application was lodged, ensuring no retroactive disadvantages to existing rights or obligations.
Scope and Application
The Tariff Concession Instrument No. 0948450, made under the Customs Act 1901, applies to goods specifically identified in the application by Xtek Ltd for a tariff concession order (TCO). This Act governs the process by which the Chief Executive Officer of Customs can grant tariff concessions, reducing the duty payable on specified goods. The application and subsequent TCO relate to certain explosive ordinance disposal vehicle parts, for which the normal customs duty rate is 5%, but the TCO stipulates a duty-free rate. The Act applies to the CEO, applicants such as Xtek Ltd, and ultimately to the importers of the specified goods, thereby affecting their rights and obligations under customs law. The geographic reach of the Act is national, as it operates under the authority of the Commonwealth. However, certain goods, as outlined in section 269SJ of the Act, are ineligible for tariff concessions, and the CEO must ensure that applications do not pertain to these excluded items. The application process and the terms of the TCO are further detailed in subordinate instruments, which may extend or restrict the application of the Act through specific provisions and definitions.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0948450 under the Customs Act 1901 provide that a Tariff Concession Order (TCO) can be made by the Chief Executive Officer of Customs (CEO) to lower the customs duty on certain goods (section 269F). The CEO is required to consider whether the application for a TCO meets the core criteria, specifically that no substitutable goods are produced in Australia in the ordinary course of business (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed rate of duty (section 269P(3)). In this case, the CEO declared that certain explosive ordinance disposal vehicle parts are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5% (section 269P(3)).
The obligations imposed by this legislation on the parties involved include the requirement for applicants to ensure their applications meet the core criteria, specifically that no substitutable goods are produced in Australia (section 269C). The CEO is obligated to consider the application and determine if it meets the core criteria, publish a notice in the Gazette inviting submissions on the application, and if satisfied, to make a written TCO (sections 269K(1), 269P(3)). The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on such persons (subsection 269S(1)).
Any breaches of this legislation may have civil and criminal consequences. The penalties for breaches can include fines and imprisonment. The maximum penalties for customs-related offences under the Customs Act 1901 can include fines of up to $22,200 for individuals and up to $111,000 for corporations, along with potential imprisonment for up to five years (subsection 246AC(2)). Additionally, under the Crimes Act 1914, the CEO may impose administrative penalties for breaches, which can include significant fines (subsection 13GD(4)). These penalties are intended to ensure compliance with the provisions of the Customs Act 1901 and its instruments, such as this Tariff Concession Instrument.