EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1012857
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.
Downer EDI Rail Pty Ltd applied for a TCO in respect of certain passenger train brake system valves on 15 March 2010.
Instrument
TCO No 1012857 was made on 04 June 2010. It declares that those certain passenger train brake system valves 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. 1012857 is taken to have come into force on 15 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 Commonwealth Parliament, provides a framework for the regulation of customs and excise in Australia. One of the mechanisms under this Act is the ability for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which reduce customs duty rates on certain imported goods under specific conditions. The primary gap addressed by this legislative instrument is the need for a streamlined process to allow businesses to apply for tariff reductions on goods that are not produced domestically and for which no suitable domestic substitutes exist. The objective is to support Australian businesses by reducing the cost of imported goods that are essential for their operations but not manufactured locally. The Explanatory Statement for Tariff Concession Instrument No. 1012857 details the application and approval process, confirming that the CEO was satisfied that no substitutable goods were produced in Australia for certain passenger train brake system valves, leading to the concession of free duty on these items. This legislative action ensures that the rights of existing parties are protected while providing a beneficial tariff reduction to importers.
Scope and Application
The Tariff Concession Instrument No. 1012857, issued under the Customs Act 1901, applies to goods that are the subject of a Tariff Concession Order (TCO) and specifically to Downer EDI Rail Pty Ltd's application for certain passenger train brake system valves. This instrument is pertinent to any entity that seeks to import these valves into Australia, providing them with a tariff concession, specifically reducing the duty from the general rate of 5% to free. The scope of the Act encompasses entities seeking tariff concessions for imported goods, provided that no substitutable goods are produced in Australia in the ordinary course of business, aligning with the criteria set out in section 269C of the Act. The TCO applies nationally and its effect is limited to the goods specified in the order, which in this case are certain passenger train brake system valves. The instrument does not apply to goods specified in section 269SJ of the Act that cannot be subject to a TCO. The TCO was made in accordance with the Act, and its commencement date aligns with the date the application was lodged, that is, 15 March 2010. The rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the commencement date.
Key Provisions
The Customs Act 1901, specifically Part XVA, outlines the framework for Tariff Concession Orders (TCOs) as stated in sections 269C, 269F, 269P, and 269S. Section 269F enables individuals to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning particular goods, provided these goods are not excluded under section 269SJ. If the application is deemed valid and meets the criteria outlined in section 269C, the CEO is mandated to issue a written TCO order. The application is considered valid if, on the date of submission, no substitutable goods are being produced in Australia in the ordinary course of business, as defined by sections 269B, 269D, and 269E. Upon satisfying these criteria, the CEO must declare in the TCO that the specified goods are subject to a prescribed item of Schedule 4 in the Customs Tariff Act 1995.
The obligations under the Act require the CEO to rigorously evaluate each TCO application to ensure it meets the stipulated criteria, specifically that no substitutable goods are being produced in Australia. This involves a comprehensive assessment of the production status of relevant goods within the ordinary course of business. Once a TCO application is accepted, the CEO must publish a notice in the Gazette, inviting submissions from any interested parties who may have reasons to oppose the TCO, as required by section 269K(1). The CEO did not receive any submissions in response to the published notice for TCO No. 1012857. Furthermore, the TCO comes into force on the date the application was lodged, as stipulated by section 269S(1). Importantly, the TCO does not disadvantage any person other than the Commonwealth or impose liabilities for actions taken before the TCO's registration.
Failure to comply with the provisions of the Customs Act 1901 concerning TCOs can lead to various legal consequences. The Act does not explicitly detail penalties for non-compliance, but breaches of customs regulations generally can result in severe civil and criminal penalties. Civil penalties may include fines, confiscation of goods, and other financial penalties as determined by the court. Criminal penalties could involve imprisonment, depending on the severity of the breach. The precise penalties are often determined by the specific circumstances of the case and the discretion of the court. In this context, any entity or individual who contravenes the provisions of the Act or the terms of the TCO may face these consequences, underscoring the importance of adherence to the legislative requirements.