EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014887
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.
Siemens Ltd applied for a TCO in respect of certain switchgears on 26 March 2010.
Instrument
TCO No 1014887 was made on 22 July 2010. It declares that those certain switchgears 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. 1014887 is taken to have come into force on 26 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 was enacted by the Parliament of Australia to manage and regulate the importation and exportation of goods within the country. The Act, particularly Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The problem this legislation addresses is the facilitation of the import of certain goods by reducing or eliminating customs duties on them, thereby potentially lowering costs for businesses and consumers. This scheme is intended to support the Australian economy by making certain imported goods more affordable, provided they are not substitutable by domestically produced goods. The Tariff Concession Instrument No. 1014887, made under the authority of the Customs Act, exemplifies this process, as it was issued in response to an application by Siemens Ltd for tariff concessions on specific switchgears, resulting in a reduction of the duty rate from 5% to free. The policy objective is to enhance the competitiveness of the Australian market by ensuring that certain imports are not unduly burdened by customs duties, while maintaining the integrity of the domestic industry.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs) under Part XVA, facilitates the granting of lower customs duty rates for specific goods, provided they meet certain criteria. This Act applies to any person or entity that applies for a TCO in respect of goods that are not specified in section 269SJ of the Act, which excludes certain types of goods from eligibility. The geographic reach of the Act is national, as it applies across Australia. The Act also mandates that the Chief Executive Officer of Customs (CEO) must determine whether the application meets core criteria, primarily focusing on the non-production of substitutable goods in Australia, before issuing a TCO. The CEO's decision is informed by sections 269C, 269D, 269E, and 269P of the Act, which define key terms such as "substitutable goods" and outline the conditions for issuing a TCO. The application of this Act can be extended or restricted through subordinate instruments, thereby allowing for flexibility in its implementation.
Key Provisions
The main operative sections of this legislation pertain to Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C, 269B, 269D, 269E, 269P, 269SJ, and 269K). Specifically, section 269F allows for applications to the Chief Executive Officer of Customs (CEO) for a TCO regarding goods. The CEO must determine if the application meets the core criteria outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged. If the application meets these criteria, the CEO is required to make a written order declaring the goods eligible for a tariff concession as per section 269P(3).
The obligations imposed by the Act primarily concern the CEO and applicants for TCOs. The CEO must ensure that applications for TCOs are valid and that they meet the criteria specified in section 269C. This includes verifying that no substitutable goods are produced in Australia in the ordinary course of business on the application date. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties once an application is accepted as valid, as stipulated in section 269K(1). The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities on any person in respect of actions taken before the TCO's registration date.
In terms of consequences for breach, the Customs Act 1901 does not explicitly detail specific offences, penalties, or civil/criminal consequences for failing to comply with the Act's requirements concerning TCOs. However, general provisions within the Customs Act may apply to breaches of duty or non-compliance with customs regulations, which could lead to penalties under other sections of the Act. For instance, section 239D outlines penalties for breaches of the Act, which can include fines and imprisonment. The precise penalties would depend on the nature and severity of the breach.