EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0949036
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.
Voith Turbo Transmissions applied for a TCO in respect of certain universal joint shafts on 16 December 2009.
Instrument
TCO No 0949036 was made on 5 March 2010. It declares that those certain universal joint shafts 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. 0949036 is taken to have come into force on 16 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 Customs Act 1901 was enacted to provide a regulatory framework for customs and excise, among other things, within Australia. Specifically, it was designed to facilitate the administration of tariffs and ensure the smooth flow of goods across Australia’s borders. The Act was enacted by the Commonwealth Parliament, reflecting the federal nature of Australia’s governance structure. The policy objective behind the Act is to enable the regulation of customs and excise in a manner that supports economic growth and protects Australian industries where necessary. One mechanism through which this is achieved is the provision for Tariff Concession Orders (TCOs) under Part XVA of the Act, allowing for the reduction or elimination of customs duties on certain goods to foster trade and industry competitiveness. This instrument, F2010L01601, provides for a TCO that was applied for by Voith Turbo Transmissions concerning certain universal joint shafts, resulting in a concession that eliminated the duty on these goods.
Scope and Application
The Tariff Concession Instrument No. 0949036 under the Customs Act 1901 applies to the particular universal joint shafts for which Voith Turbo Transmissions made an application on 16 December 2009. The instrument was made by the Chief Executive Officer of Customs on 5 March 2010, following a determination that no substitutable goods were being produced in Australia in the ordinary course of business at the time the application was lodged. This means that the CEO was satisfied that the application met the core criteria set out in section 269C of the Act. The instrument specifically assigns these goods to item 50 of Schedule 4 to the Customs Tariff Act 1995, granting them a free rate of duty instead of the general rate of 5%. The geographic and jurisdictional reach of this legislation is national, applying throughout Australia as a Commonwealth act. The TCO does not extend to disadvantage any person or impose liabilities on anyone in respect of anything done or omitted to be done before its registration date, though it does benefit the rights of importers by allowing them to apply for a refund of duty on goods imported since the TCO came into effect on 16 December 2009.
Key Provisions
The Customs Act 1901 (section 269F) outlines the process for applying for a Tariff Concession Order (TCO), which allows for a lower rate of customs duty on specified goods. If an applicant, such as Voith Turbo Transmissions, submits an application for a TCO, the Chief Executive Officer of Customs (CEO) must assess whether the application meets the core criteria (section 269C). This assessment hinges on whether, on the application date, no substitutable goods were produced in Australia in the ordinary course of business (section 269P(3)). If the CEO is satisfied, they must issue a written TCO (section 269P(3)). For example, in TCO No. 0949036, the CEO found that no substitutable goods were produced in Australia for certain universal joint shafts, leading to a TCO that sets the duty rate at free, down from the general rate of 5%.
The Act imposes several obligations on the CEO, primarily to ensure that the application process is transparent and inclusive. Under section 269K(1), the CEO must publish a notice in the Gazette after accepting an application as valid. This notice must invite any interested parties to lodge submissions if they believe the TCO should not proceed. In the case of TCO No. 0949036, no submissions were received, indicating a lack of opposition to the concession. Additionally, the TCO must be registered on the date the application was lodged (section 269S(1)). This registration means that importers can apply for a refund of duties paid on goods imported since the TCO's effective date (Regulation 126(1)(r)).
The Act does not specify explicit offences or penalties for breaching the provisions of a TCO, but it does clarify that the TCO does not disadvantage any person or impose liabilities for actions taken before the TCO's effective date (section 269S(1)). This means that while the TCO provides benefits to importers by reducing duty rates, it does not create retrospective liabilities or negatively impact existing rights. Any legal challenges or non-compliance issues would likely fall under broader customs and trade regulations, which might involve civil or criminal penalties as outlined in other sections of the Customs Act or related legislation.