EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1001049
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.
Robert Bosch Aust Pty Ltd applied for a TCO in respect of certain ignition coils on 07 January 2010.
Instrument
TCO No 1001049 was made on 26 March 2010. It declares that those certain ignition coils 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. 1001049 is taken to have come into force on 07 January 2010.
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 Commonwealth Parliament, establishes a framework for the administration of customs and excise duties, including the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) under Part XVA. This provision was introduced to address the need for flexibility in tariff applications, allowing for the consideration of unique circumstances that may warrant a concession on the standard customs duty. Instrument No. 1001049, issued on 26 March 2010, exemplifies the application of this framework. In this instance, Robert Bosch Aust Pty Ltd applied for a TCO concerning specific ignition coils, and the CEO determined that a tariff concession was warranted as no substitutable goods were produced in Australia. The concession, which reduces the duty from the general rate of 5% to free, is effective from the date of the application, 7 January 2010, and benefits importers by potentially entitling them to a refund of duties paid on imports of the specified goods since that date. The policy objective of this legislation is to facilitate economic efficiency and competitiveness by providing relief where appropriate, ensuring that Australian businesses are not unduly disadvantaged in the global market.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) that result in lower rates of customs duty on certain goods. This mechanism applies to individuals and entities who can demonstrate that the goods they import do not have substitutable equivalents produced within Australia. The process involves an application to the CEO, who then assesses the application against specific criteria to determine whether it meets the core requirements, particularly focusing on whether substitutable goods are produced in Australia. If the CEO is satisfied that the application meets these criteria, a TCO is issued, as was the case with TCO No. 1001049 for certain ignition coils, which set the duty rate at free as opposed to the general 5% rate. The TCO applies nationally and benefits importers by allowing them to claim refunds on duties paid on the affected goods since the TCO's effective date, without imposing any new liabilities on them or other persons. The Act ensures that the rights of non-Commonwealth persons are not adversely affected by the issuance of a TCO.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 1001049 under the Customs Act 1901 (the Act) focus on the process and criteria for making a Tariff Concession Order (TCO) (ss 269F, 269C, 269B). Section 269F allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO concerning certain goods. If the application meets the core criteria outlined in sections 269C and 269B, the CEO must make a TCO (s 269P(3)). Section 269C specifies that an application meets the core criteria if, on the application date, no substitutable goods were produced in Australia in the ordinary course of business. This instrument was made on 26 March 2010, declaring that certain ignition coils are subject to item 50 of Schedule 4 to the Tariff, with the duty rate being free as opposed to the general rate of 5%.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to consider whether an application for a TCO meets the core criteria, specifically whether substitutable goods were produced in Australia on the application date (s 269C). The CEO must also publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (s 269K(1)). If no submissions are received, the CEO is obligated to proceed with the TCO.
The legislation also outlines the consequences for breaches, although no specific offences or penalties are detailed in this explanatory statement. However, general principles under the Customs Act 1901 apply, where breaches could potentially lead to civil or criminal penalties depending on the severity and intent of the breach. The TCO does not affect the rights of persons other than the Commonwealth as at the date of registration, nor does it impose any liabilities on any person (s 269S(1)).
This instrument's effective date is the day the application for the TCO was lodged, which is 07 January 2010 (s 269S(1)). It ensures that importers of the specified goods can apply for a refund of duty on goods imported since this effective date, benefiting from the reduced duty rate (Reg 126(1)(r)).