EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1015007
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 air supply modules on 26 March 2010.
Instrument
TCO No 1015007 was made on 18 June 2010. It declares that those certain passenger train brake system air supply modules 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. 1015007 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, as amended, allows for the creation of Tariff Concession Orders (TCOs) which reduce the customs duty on specific goods. Enacted by the Parliament of Australia, the 2010 Tariff Concession Instrument No. 1015007 was introduced to address the gap in the tariff concession scheme by providing a mechanism for the Chief Executive Officer of Customs to lower the customs duty on certain goods where no substitutable goods are produced in Australia. This was done to ensure that Australian businesses remain competitive and that consumers benefit from lower prices on specific imported goods. The policy objective behind this instrument was to facilitate a more flexible and responsive customs duty regime, ensuring that tariff concessions are granted where appropriate, and to encourage economic growth through the reduction of duty on certain imported goods.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCOs) for certain goods, granting them a lower rate of customs duty. The application for a TCO must meet specific criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business. In cases where the CEO determines that the application meets these criteria, they must issue a written order specifying the goods to which a particular item of the Customs Tariff Act 1995 applies, thereby reducing the duty rate. For instance, TCO No. 1015007 applies to certain passenger train brake system air supply modules, lowering the duty from 5% to free. The process requires the CEO to publish a notice in the Gazette, inviting submissions from interested parties; however, in the case of TCO No. 1015007, no submissions were received. The TCO does not retroactively affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date.
Key Provisions
The Tariff Concession Instrument No. 1015007 under the Customs Act 1901 (section 269F) allows for the application of a lower rate of customs duty on certain goods. Specifically, in this case, certain passenger train brake system air supply modules will benefit from a tariff concession, with the duty rate dropping from the general rate of 5% to free of charge. This concession was made possible through a written order (section 269P(3)) issued by the Chief Executive Officer (CEO) of Customs, following an application by Downer EDI Rail Pty Ltd on 26 March 2010, and published in the Gazette on 18 June 2010.
The Act imposes specific obligations on the CEO when considering a Tariff Concession Order (TCO) application. The CEO must ensure that the application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO. Additionally, the CEO must verify that the application meets the core criteria set out in section 269C. This involves confirming that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of key terms such as 'substitutable goods', 'goods produced in Australia', and 'ordinary course of business' are provided in sections 269D, 269E, and 269F respectively.
Failure to comply with the requirements of the Customs Act 1901 or the provisions of a Tariff Concession Order can result in both civil and criminal consequences. However, the Explanatory Statement does not provide explicit details on the specific offences, penalties, or civil/criminal consequences for breaches related to the issuance or application of TCOs. It is advisable for parties involved to refer to the broader provisions of the Customs Act and related legislation for comprehensive information on penalties and enforcement mechanisms.