EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1011683
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.
Atlas Copco Australia Pty Ltd applied for a TCO in respect of certain mining scaling rigs on 09 March 2010.
Instrument
TCO No 1011683 was made on 28 May 2010. It declares that those certain mining scaling rigs 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. 1011683 is taken to have come into force on 09 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 Parliament of Australia, establishes a framework for the imposition of customs duties on imported goods. Part XVA of this Act introduces the concept of Tariff Concession Orders (TCOs), which allow for the reduction or exemption of customs duty on certain goods under specific conditions. The purpose of this mechanism is to facilitate trade and economic development by providing tariff relief for goods that are not produced domestically or are not substitutable with locally manufactured alternatives. This legislative instrument aims to address the economic disadvantage faced by industries that rely on imported goods that are essential for their operations but face high import duties. The policy objective behind TCOs is to encourage economic efficiency and support industries by making imported goods more competitively priced against local products. This approach helps in maintaining a balanced trade environment while supporting domestic industries that may not yet be at a competitive scale to produce certain goods domestically.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs), which can reduce customs duty rates for specific goods, as implemented through instruments such as TCO No. 1011683. This particular order pertains to certain mining scaling rigs, which now benefit from a zero rate of duty, as opposed to the general rate of 5%, due to the absence of substitutable goods produced in Australia. The Act applies to any person or entity seeking to import goods eligible for a TCO, provided the goods are not listed in section 269SJ, which excludes certain types from TCO eligibility. The Act's application is national in scope, operating under the authority of the Commonwealth. The geographic reach is not limited to specific states or territories but applies across Australia. The Act extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the applicable duty rates. Any person considering the application of a TCO has the opportunity to submit objections, although in this instance, no submissions were received. The commencement of TCO No. 1011683 is effective from the date of application, which in this case was 09 March 2010, ensuring that importers can avail themselves of the tariff concession from that date.
Key Provisions
The primary sections of this legislation, specifically TCO No. 1011683, focus on the creation of tariff concession orders (TCOs) under the Customs Act 1901 (section 269F) and their effects. Section 269C outlines the core criteria that an application must meet for a TCO to be granted, primarily focusing on whether there are substitutable goods produced in Australia. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must issue a TCO (section 269P(3)), as was done in the case of Atlas Copco Australia Pty Ltd's application for certain mining scaling rigs. The TCO declares that these goods are subject to a specific item in the Customs Tariff Act 1995, resulting in a tariff concession.
The obligations imposed by this legislation primarily fall on the CEO of Customs, who must review applications for TCOs against the specified criteria. If an application is deemed valid, the CEO is required to make a written TCO order and publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made (subsection 269K(1)). The CEO must also ensure that the TCO does not disadvantage any person or impose new liabilities on them (subsection 269S(1)). This obligation extends to ensuring that the TCO's commencement does not adversely affect the rights of any person who was in a particular position before the TCO was registered.
The legislation does not explicitly list offences or penalties for breach. However, the process outlined suggests that failure to adhere to the requirements or misuse of the TCO provisions could potentially lead to legal challenges or administrative penalties. Although the document does not specify maximum penalties, breaches of customs regulations generally can result in significant civil and criminal consequences, including fines and imprisonment. The absence of specific penalties in this text implies that existing general customs laws and regulations apply in cases of non-compliance.
Overall, this legislation aims to streamline the process for granting tariff concessions on certain goods, ensuring that the rights and obligations of all parties are clearly defined and protected. The obligations placed on the CEO are designed to maintain fairness and transparency in the application process, while the potential civil and criminal consequences serve as a deterrent against non-compliance.