EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1026178
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.
Hitachi Construction Machinery Australia Pty Ltd applied for a TCO in respect of certain earthmover hydraulic hoses on 10 June 2010.
Instrument
TCO No 1026178 was made on 06 September 2010. It declares that those certain earthmover hydraulic hoses 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. 1026178 is taken to have come into force on 10 June 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 and aims to facilitate the regulation of customs and border control while fostering trade. One aspect of the Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allows for the reduction of customs duty on certain goods. This mechanism was introduced to address the need for targeted tariff relief, particularly when there is a lack of local production of substitutable goods. The Tariff Concession Instrument No. 1026178, enacted in 2010, exemplifies this by providing tariff relief on certain earthmover hydraulic hoses, effectively setting their duty rate to free, provided no substitutable goods are produced in Australia. The policy objective behind this concession is to support specific industries by reducing import costs, thereby encouraging competitiveness and potentially stimulating local production where feasible.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to entities or individuals seeking a reduction in customs duty on specific goods by applying for a TCO. The legislation is designed to benefit entities that import goods that are not produced domestically, ensuring that such imports are not subjected to higher customs duties when suitable domestic alternatives are not available. The geographic reach of this Act is national, as it pertains to the importation of goods into Australia. It is important to note that certain goods are excluded from TCO eligibility, as specified in section 269SJ of the Act. The Act allows for the extension of its application through subordinate instruments, such as the Customs Tariff Act 1995, which includes the schedule of tariff items to which TCOs can apply. The process includes public consultation, as mandated by section 269K(1) of the Act, ensuring transparency and the opportunity for public input before a TCO is finalised.
Key Provisions
The primary sections of the Tariff Concession Order No. 1026178, as explained in the Customs Act 1901, revolve around the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (section 269F). This particular TCO applies to certain earthmover hydraulic hoses, reducing the customs duty rate from the general 5% to free (section 269P). The application for a TCO must meet the core criteria outlined in section 269C of the Act, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged (section 269SJ). If the CEO is satisfied that these criteria are met, they must make a written TCO order (section 269P(3)).
The obligations imposed by the Act on the parties involved are quite specific. The CEO must ensure that any application for a TCO is assessed against the core criteria, particularly verifying that no substitutable goods were produced in Australia (section 269C). Hitachi Construction Machinery Australia Pty Ltd, as the applicant, must provide all necessary information to substantiate their claim that no substitutable goods were produced in Australia. Upon acceptance of the application, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). If no submissions are received, the TCO can proceed.
Under the Customs Act 1901, breaches of the conditions set out in the TCO or any associated regulations may result in civil or criminal penalties. For instance, if a person knowingly or recklessly makes a false statement or representation in an application for a TCO, they may be liable for penalties (section 270). The maximum penalty for such an offence is generally outlined in the relevant regulations but can include fines and, in severe cases, imprisonment. The Act also provides for the possibility of recovery of any undue benefits obtained from the concession, ensuring that the concessions are not abused and that the intended benefits are only received by those genuinely eligible.