EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1013564
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.
Engine Australia applied for a TCO in respect of certain diesel engine piston rings on 18 March 2010.
Instrument
TCO No 1013564 was made on 04 June 2010. It declares that those certain diesel engine piston rings 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. 1013564 is taken to have come into force on 18 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, introduced a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). This was designed to address the need for providing relief on customs duties for certain goods, thereby encouraging trade and industry development. The Act allows for a lower rate of customs duty for goods that are subject to a TCO, provided they meet the core criteria specified in section 269C of the Act, such as the absence of substitutable goods produced in Australia. The objective of this legislative framework is to support Australian businesses by reducing the cost of imported goods, thus fostering a competitive market. The Tariff Concession Instrument No. 1013564, enacted on 04 June 2010, exemplifies this by granting a tariff concession for certain diesel engine piston rings, reducing the duty from 5% to free, following an application by Engine Australia.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (the CEO). This Act applies to any person who can apply for a TCO in respect of goods, ensuring that a lower rate of customs duty is applied if certain criteria are met. Specifically, a TCO may be issued if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The Act applies nationally across Australia, impacting entities involved in the importation of goods, and it does not extend to goods specified in section 269SJ, which are ineligible for TCOs. The CEO must ensure the application meets the core criteria set out in section 269C of the Act before making a decision, and once a TCO is made, it is taken to have come into force on the date the application was lodged, as per section 269S(1) of the Act. The TCO does not affect any pre-existing rights or impose any liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of this Tariff Concession Instrument (TCO) pertain to the Customs Act 1901 and the Customs Tariff Act 1995. Section 269F (1) of the Customs Act allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria, as outlined in sections 269C and 269P(3) of the Act, they are required to make a written order that declares the goods in question are subject to a lower rate of customs duty. Specifically, section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a TCO that specifies the applicable duty rate under Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed on the parties governed by this Act primarily involve ensuring that applications for TCOs are made in accordance with the statutory requirements. The CEO of Customs must assess whether the application meets the core criteria, including verifying that no substitutable goods were produced in Australia on the date of the application. This involves a review of production data and determining whether the goods can be substituted with Australian-made alternatives. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties if they consider the TCO should not proceed. If no submissions are received, the CEO can proceed to make the TCO.
In terms of consequences for breaches, the Act does not explicitly outline offences or penalties for non-compliance with the TCO provisions. However, it is likely that any failure to adhere to the statutory requirements for making a TCO could be subject to administrative scrutiny or legal challenge. While the explanatory statement does not specify maximum penalties, breaches of customs regulations generally could result in fines and other penalties under the Customs Act, including civil or criminal charges for significant non-compliance. It is also possible that importers could face penalties for incorrect claims of duty refunds if they do not comply with the conditions set out in the TCO.