EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1012994
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.
Hitachi Construction Machinery Australia Pty ltd applied for a TCO in respect of certain earthmover parts on 15 March 2010.
Instrument
TCO No 1012994 was made on 13 August 2010. It declares that those certain earthmover parts 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. 1012994 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 Australian Parliament, establishes a framework for the administration of customs and excise through the Australian Border Force, including provisions for Tariff Concession Orders (TCOs) under Part XVA. This legislation was designed to address the need for a streamlined process to provide tariff relief for imported goods that are not produced in Australia, thus promoting competitive imports and reducing costs for Australian businesses and consumers. Tariff Concession Instrument No. 1012994, made under this Act, was introduced to provide a tariff concession for specific earthmover parts by reducing the duty from the general rate of 5% to zero, effective from the date the application was lodged on 15 March 2010. The policy objective is to ensure that tariff relief is granted where no substitutable goods are produced domestically, thereby encouraging trade and economic efficiency.
Scope and Application
The Customs Act 1901, under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). The Act applies to any person or entity seeking to import goods that are not produced in Australia in the ordinary course of business and for which no substitutable goods are produced domestically. This mechanism enables the application for a TCO, which if approved, results in a reduction or exemption of customs duty on specified goods. The application process involves ensuring that the goods in question do not fall under the exclusions listed in section 269SJ of the Act, which typically includes sensitive or strategic goods. The geographic reach of this legislation is national, as it applies across Australia under the Commonwealth's authority. The Act allows for the extension or restriction of its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the duty rates in Schedule 4. TCO No. 1012994, for example, illustrates this process by applying a zero duty rate to certain earthmover parts, reducing the general rate from 5% as of the application date of 15 March 2010.
Key Provisions
The primary operative sections of the Customs Act 1901, as applied in Tariff Concession Instrument No. 1012994, include sections 269F, 269C, and 269P. Section 269F allows any person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) concerning specific goods. If the application is deemed valid, section 269C sets the criteria for the CEO to consider in determining whether the application meets the core requirements. Section 269P(3) requires the CEO to issue a written TCO if the core criteria are satisfied, effectively granting the tariff concession on the specified goods.
The Customs Act 1901 imposes several obligations and requirements on the parties it governs. Firstly, applicants must ensure that their applications meet the criteria outlined in section 269C, specifically that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged. Secondly, the CEO is mandated to publish a notice in the Gazette, inviting any interested parties to submit objections to the TCO, as per section 269K(1). The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth or impose liabilities on them concerning actions taken before the TCO registration, in accordance with section 269S(1).
The Act provides for specific consequences in the event of non-compliance with its provisions. While the Act does not explicitly outline criminal penalties, it does set forth civil consequences for breaches. The imposition of incorrect duties or failure to claim the correct tariff concessions can lead to financial penalties and administrative actions against the offending parties. Moreover, the Act ensures that the TCO does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth, safeguarding against adverse consequences for those who acted in good faith prior to the TCO's effective date. Importers, however, benefit from the ability to apply for duty refunds on goods imported since the TCO's effective date, as stipulated in paragraph 126(1)(r) of the Regulations.