EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1010915
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.
Fluid Power Technologies Trading applied for a TCO in respect of certain dc electric motors on 03 March 2010.
Instrument
TCO No 1010915 was made on 21 May 2010. It declares that those certain dc electric motors 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. 1010915 is taken to have come into force on 03 March 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 Australian Parliament, provides a framework for the administration of customs and excise duties and the control of the importation and exportation of goods. One of the key components of this framework is the scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 1010915 was introduced to address the specific problem of providing tariff concessions on certain dc electric motors, which were not being produced in Australia at the time. The policy objective behind this instrument, as stated in the explanatory statement, is to ensure that such goods can be imported without incurring the general rate of duty, thus facilitating their availability and potentially encouraging local manufacturing if circumstances change. The instrument was created following an application by Fluid Power Technologies Trading and came into force on the date of the application, 03 March 2010.
Scope and Application
The Tariff Concession Instrument No. 1010915, made under the Customs Act 1901, applies to certain dc electric motors and establishes a tariff concession order (TCO) for these goods. The TCO is applicable to the persons or entities importing these dc electric motors into Australia. The geographic and jurisdictional reach of the Act extends to the Commonwealth level, as it is enacted under the authority of the Customs Act 1901. The stated exclusions for this TCO are goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO. The application process for a TCO requires that the CEO of Customs must be 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 application process may be extended or restricted through subordinate instruments, but the primary criteria for a TCO remain as defined in the Customs Act 1901. The rights of importers will be beneficially affected, and they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
Key Provisions
The Customs Act 1901, as amended, allows for the creation of Tariff Concession Orders (TCOs) through section 269F, which permits an application to the Chief Executive Officer of Customs (CEO) for tariff concessions on specific goods. If the CEO determines that the application is valid and does not pertain to goods specified in section 269SJ, which are ineligible for TCOs, they must then assess whether the application meets the core criteria under section 269C. For a TCO to be granted, it must be established that no substitutable goods were produced in Australia on the day the application was lodged, with "substitutable goods" defined by section 269D as goods produced in Australia that can serve the same use as the goods in question.
The obligations imposed by the Customs Act on the CEO include the publication of a notice in the Gazette, as per section 269K(1), inviting any interested party to submit reasons why a TCO should not be granted. This ensures transparency and provides an opportunity for public input. In the case of Tariff Concession Order No. 1010915, which pertains to certain dc electric motors, the CEO made the order on 21 May 2010, effective from the date the application was lodged, 03 March 2010. The CEO's decision was based on the absence of substitutable goods in Australia at the time of the application.
Under section 269P(3), once the CEO is satisfied that the application meets the core criteria, they are required to issue a written TCO. This order specifies that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995. For the dc electric motors in question, this means they are now subject to a duty rate of free, down from the general rate of 5%. The TCO ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the concession, and it does not impose any new liabilities on individuals or entities.
The Customs Act does not outline specific offences, penalties, or consequences for breach related to the issuance or administration of TCOs. However, any misuse of the concession or fraudulent claims could potentially lead to civil or criminal penalties under other provisions of the Customs Act or related legislation, such as penalties for false statements or fraud, which could include fines or imprisonment depending on the severity of the offence.