EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023590
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 starter motors on 26 May 2010.
Instrument
TCO No 1023590 was made on 17 August 2010. It declares that those certain starter motors 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. 1023590 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 Tariff Concession Instrument No. 1023590, enacted in 2010 under the Customs Act 1901, addresses the issue of providing tariff concessions on specific goods that are not produced domestically. The Customs Act 1901 allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply lower rates of customs duty on specified goods. The problem this legislation was introduced to address is the potential economic advantage of imported goods over locally produced alternatives by ensuring that such imported goods attract a tariff that is not prohibitively high, thus promoting fair competition and supporting the local industry where applicable. The Tariff Concession Instrument No. 1023590 specifically pertains to certain starter motors, where the application by Ashdown Ingram was accepted due to the absence of substitutable goods produced in Australia, resulting in a tariff concession that reduces the duty from 5% to free. The instrument was introduced without any submissions against it, and it came into effect on the date the application was lodged, 26 May 2010.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs), which provide lower rates of customs duty on certain goods. This Act applies to any person or entity seeking a concession on customs duties for specified goods, provided the application complies with the criteria set out in the Act. Geographically, the application of the Act is national, as it is a Commonwealth statute. The Act applies to goods that are not produced in Australia in the ordinary course of business and for which there are no substitutable goods available domestically. Exclusions under section 269SJ prevent certain goods from being eligible for a TCO. The scope of the Act can be extended or restricted through subordinate instruments, which may include regulations or further legislative amendments. The TCO process involves an application being made to the CEO, followed by a publication in the Gazette inviting submissions from interested parties, though in this instance no submissions were received. The Tariff Concession Order No. 1023590, effective from the date the application was lodged, provides a zero percent duty rate on specified starter motors, previously subject to a 5% duty, benefiting importers by potentially allowing for duty refunds on imports made since the effective date of the TCO.
Key Provisions
The Customs Act 1901 establishes a framework for Tariff Concession Orders (TCOs), as outlined in section 269F. This framework allows the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on goods specified in a TCO. Section 269C specifies that for an application to meet the core criteria, no substitutable goods must be produced in Australia in the ordinary course of business on the day the application was lodged. The CEO is mandated to make a written TCO if the application meets these criteria, as detailed in section 269P(3). This process was exemplified in the case of Ashdown Ingram, which applied for a TCO for certain starter motors on 26 May 2010. Following a review, the CEO was satisfied that no substitutable goods were produced in Australia, and thus, a TCO was issued on 17 August 2010, making the starter motors eligible for a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Entities and individuals subject to the Customs Act 1901 have specific obligations when dealing with TCOs. Firstly, applicants must ensure that their TCO applications comply with section 269F and that the goods do not fall under the exclusions listed in section 269SJ. The CEO has the responsibility to evaluate whether the application meets the core criteria and to publish a notice in the Gazette inviting submissions, as required by section 269K(1). Importers, once the TCO is in effect, benefit from the lower customs duty rates and can apply for duty refunds on goods imported since the TCO's effective date, as stipulated in paragraph 126(1)(r) of the Regulations.
Under the Customs Act 1901, breaches of the regulations concerning TCOs may result in civil or criminal penalties. Although the specific penalties are not detailed in the explanatory statement, the Act generally provides for substantial fines and potential imprisonment for serious breaches. The exact penalties would depend on the nature and severity of the offence, as outlined in other sections of the Customs Act 1901 and associated regulations. Non-compliance with TCO provisions could potentially lead to financial penalties, confiscation of goods, or other administrative actions to enforce adherence to the terms of the Act.