EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1000126
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.
The Haines Group applied for a TCO in respect of certain outboard or sterndrive engine propellers on 31 December 2009.
Instrument
TCO No 1000126 was made on 26 March 2010. It declares that those certain outboard or sterndrive engine propellers 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. 1000126 is taken to have come into force on 31 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, enacted by the Parliament of Australia, provides a framework for the regulation of customs duties and includes provisions for Tariff Concession Orders (TCOs) to offer relief from standard customs duties on certain goods. The 2010 Tariff Concession Instrument No. 1000126 addresses the specific need to provide tariff concessions on outboard or sterndrive engine propellers by the Chief Executive Officer of Customs. This instrument was introduced to support the Haines Group's application for reduced customs duties on these goods, aligning with the policy objective of encouraging the import and use of specific goods by removing or reducing the financial burden of customs duties where no substitutable goods are produced domestically. The process involved the CEO assessing the application against the core criteria and, upon confirmation that no substitutable goods were produced in Australia, issuing the TCO to grant a zero-rate duty on the specified propellers. This legislative action ensures that the rights of importers are protected and can benefit from duty refunds on qualifying imports.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities seeking lower rates of customs duty on specific goods, which are not prohibited under section 269SJ of the Act. The CEO is required to evaluate whether an application for a TCO meets the core criteria, primarily whether there are no substitutable goods produced in Australia at the time the application is lodged. Once the CEO confirms that the application meets these criteria, a TCO is issued, effectively reducing the duty on the specified goods to zero. The TCO applies nationally and affects the rights of importers by allowing them to seek refunds on duties paid for goods imported since the effective date of the TCO. The TCO in question, Instrument TCO No 1000126, pertains to certain outboard or sterndrive engine propellers, which are now subject to a duty rate of free, down from the general rate of 5%.
The TCO process also mandates consultation, where the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. In the case of TCO No 1000126, no such objections were received. The TCO itself does not retroactively disadvantage or impose liabilities on any person other than the Commonwealth, and the rights of importers are beneficially impacted as they can apply for duty refunds on goods imported since the TCO’s effective date.
Key Provisions
The main operative sections of the Customs Act 1901, as modified by Tariff Concession Instrument No. 1000126, pertain to the granting of Tariff Concession Orders (TCOs) for specific goods, in this case, certain outboard or sterndrive engine propellers (ss 269C, 269B, 269D, 269E, 269P, 269SJ, 269K). A TCO application can be made by a person under section 269F of the Act, provided the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets the core criteria, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a written order declaring that the goods in question are subject to a prescribed rate of customs duty (s 269C). In this instance, the CEO determined that the application for the outboard or sterndrive engine propellers met the core criteria and thus issued TCO No. 1000126, effective from 31 December 2009.
The obligations imposed by the Customs Act 1901 on the parties governed by the Act, particularly those concerning Tariff Concession Orders, include the requirement for applicants to ensure their applications meet the core criteria, such as the absence of substitutable goods produced in Australia on the day of application (s 269C). The CEO, on receiving a valid application, is mandated to publish a notice in the Gazette, inviting any interested party to submit objections to the making of the TCO (s 269K). The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth by affecting their rights or imposing liabilities for actions taken prior to the TCO's effective date (s 269S(1)). Furthermore, the CEO must consider the definitions of key terms such as 'goods produced in Australia,' 'ordinary course of business,' and 'substitutable goods' as outlined in sections 269D, 269E, and 269F respectively.
In terms of offences, penalties, or consequences for breach under the Customs Act 1901, the Act does not explicitly detail specific offences related to the application or issuance of TCOs. However, general provisions within the Act and associated regulations may apply to breaches of customs laws, including penalties for incorrect or fraudulent declarations, evasion of duty, and non-compliance with customs regulations. The maximum penalties for these offences can vary widely, depending on the severity and intent of the breach, and are outlined in the Customs Act 1901 and the Crimes Act 1914. For instance, penalties for evasion of customs duty can result in significant fines and, in serious cases, imprisonment. The specifics of these penalties and their application would need to be assessed in the context of each individual case.