EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023588
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.
Ashdown Ingram applied for a TCO in respect of certain alternators on 26 May 2010.
Instrument
TCO No 1023588 was made on 17 August 2010. It declares that those certain alternators 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. 1023588 is taken to have come into force on 26 May 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, addresses the need for a streamlined process for reducing customs duties on specific goods. The Act, particularly Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislative framework was designed to lower customs duty rates for particular goods when certain conditions are met, thereby promoting trade and economic efficiency. The policy objective of this legislation is to provide relief to importers by reducing the financial burden of customs duties, thereby making imported goods more competitively priced in the domestic market. This was achieved by allowing applications for tariff concessions, subject to criteria such as the absence of substitutable goods produced in Australia, and ensuring that the process includes public consultation to balance interests and maintain transparency.
Scope and Application
The Tariff Concession Order (TCO) No. 1023588, as detailed in the Customs Act 1901, applies to the specific alternators for which Ashdown Ingram applied, providing a concession that reduces the customs duty from the general rate of 5% to free. This Act operates within the Commonwealth of Australia, affecting those entities and individuals involved in the importation of these specific alternators. The scope of this legislation is narrowly focused on the particular goods mentioned in the application and excludes any other goods not specified therein. The Act's application is subject to the core criteria stipulated in section 269C, which requires the Chief Executive Officer of Customs to verify that no substitutable goods are produced in Australia at the time of the application. The geographic reach of this concession is limited to the importation of the specified goods into Australia, and the TCO is effective from the date the application was lodged, 26 May 2010. Notably, the TCO does not affect any existing rights or impose liabilities on persons other than the Commonwealth prior to its registration, ensuring that the rights of importers are advantageously impacted, including the eligibility for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The key provisions of the Customs Act 1901, as it pertains to Tariff Concession Orders (TCOs), are outlined in Part XVA. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the CEO determines that the application is not for goods specified in section 269SJ, which lists items that cannot be subject to a TCO, they must then assess whether the application meets the core criteria (section 269C). An application meets these criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
The obligations under the Act for the CEO include accepting and assessing TCO applications to determine if they meet the core criteria. This involves verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO must proceed to make the TCO. The TCO comes into force on the day the application was lodged (subsection 269S(1)).
There are no specific offences or penalties outlined in the explanatory statement for the failure to comply with the requirements of the TCO. However, non-compliance with the Customs Act 1901 generally could lead to civil or criminal penalties. Civil penalties for breaches of the Customs Act can include fines and recovery of unpaid duties, while criminal penalties may involve imprisonment, fines, or both, depending on the severity of the offence. The maximum penalties are not specified in this explanatory statement but would be determined under the relevant sections of the Customs Act and associated regulations.