EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014888
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.
Kab Seating Pty Ltd applied for a TCO in respect of certain truck and bus seat parts on 26 March 2010.
Instrument
TCO No 1014888 was made on 18 June 2010. It declares that those certain truck and bus seat 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. 1014888 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, enacted by the Australian Parliament, includes provisions for the creation of Tariff Concession Orders (TCOs) through Part XVA. This scheme was introduced to address the need for lowering customs duty on specific goods where no equivalent products are produced domestically, thereby fostering competitiveness and encouraging imports of goods not manufactured in Australia. The Tariff Concession Instrument No. 1014888, issued under this framework, was enacted on 18 June 2010, following an application by Kab Seating Pty Ltd for certain truck and bus seat parts. The policy objective was to ensure that no substitutable goods were produced in Australia, as stipulated by section 269C of the Act, thus allowing for a tariff concession that benefits importers by providing a zero rate of duty on these goods, effective from the date of application on 26 March 2010.
Scope and Application
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs to create Tariff Concession Orders (TCOs) which apply reduced rates of customs duty to specified goods. An entity or individual may apply for a TCO if the goods in question are not excluded under section 269SJ of the Act and meet the core criteria outlined in section 269C. This entails demonstrating that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. If the CEO is satisfied with the application, they must issue a TCO as per section 269P(3). The CEO is also required under section 269K(1) to publish a notice in the Gazette, inviting submissions from any interested parties who might oppose the TCO; however, no such submissions need to be considered if none are received. The TCO takes effect from the date the application is lodged, as per section 269S(1) of the Act. Importantly, the TCO does not adversely affect any existing rights or impose new liabilities on persons other than the Commonwealth, and it allows importers to seek duty refunds on goods imported since the effective date of the TCO under paragraph 126(1)(r) of the Regulations.
Key Provisions
The Tariff Concession Instrument No. 1014888, pursuant to the Customs Act 1901, provides significant relief for certain goods by reducing the rate of customs duty from a general 5% to zero (sections 269F, 269P). Specifically, this Instrument applies to truck and bus seat parts as identified in Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)). The CEO of Customs must ensure that the application meets core criteria, primarily that no substitutable goods were produced in Australia at the time of the application (section 269C). If these conditions are met, the CEO must issue a written order, known as a Tariff Concession Order (TCO) (section 269P(3)). For this particular case, the application by Kab Seating Pty Ltd for these specific seat parts was accepted, and the TCO was issued on 18 June 2010, effective from 26 March 2010, the date of the application (subsection 269S(1)).
The Act imposes certain obligations on the parties involved. The CEO of Customs has the responsibility to assess whether an application for a TCO meets the core criteria and to make a written order if the criteria are satisfied (section 269P(3)). Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be granted (subsection 269K(1)). In this instance, no objections were received, leading to the issuance of the TCO. The applicant, in this case Kab Seating Pty Ltd, must also ensure that the application is made in good faith and that it meets all stipulated conditions to qualify for the tariff concession.
Failure to comply with the requirements set out in the Customs Act 1901 or the Tariff Concession Instrument No. 1014888 can result in significant legal consequences. While the explanatory statement does not detail specific penalties for breaches related to the TCO, general provisions of the Customs Act may apply. Typically, non-compliance with customs regulations can result in civil or criminal penalties, including fines and imprisonment. The exact penalties depend on the nature and severity of the breach, and the courts have broad discretion in determining appropriate sanctions.