EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1027020
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.
Cadia Holdings applied for a TCO in respect of certain ball mill inching drive assemblies on 17 June 2010.
Instrument
TCO No 1027020 was made on 13 September 2010. It declares that those certain ball mill inching drive assemblies 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. 1027020 is taken to have come into force on 17 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 to establish and manage the customs and border control system in Australia, and it includes provisions for Tariff Concession Orders (TCOs). These orders allow for reduced rates of customs duty on specific goods, provided that certain criteria are met, such as the absence of substitutable goods produced in Australia. The Customs Act 1901 was introduced by the Australian Parliament to facilitate efficient customs processes and to provide flexibility in trade through tariff concessions. The policy objective behind the introduction of TCOs is to support Australian industries by reducing the cost of imported goods that do not have local alternatives, thereby encouraging competition and economic efficiency. The Tariff Concession Instrument No. 1027020, made under the Customs Act 1901, provides a concrete example of how these concessions can be applied to specific goods, such as certain ball mill inching drive assemblies, by granting them a free rate of duty instead of the general rate of 5%.
Scope and Application
The Customs Act 1901 applies to the process of granting Tariff Concession Orders (TCOs) which are applicable to specific goods, and is administered by the Chief Executive Officer of Customs. The Act allows for the application of a lower rate of customs duty to goods specified in a TCO, subject to certain conditions such as the absence of substitutable goods produced in Australia. The application process involves submitting a request to the CEO, who will assess the application against the core criteria set out in the Act, including the production status of substitutable goods within Australia. The TCO No. 1027020, for example, pertains to certain ball mill inching drive assemblies and was made effective from the date of the application, 17 June 2010. This legislation is applicable nationally and operates within the Commonwealth jurisdiction, with no adverse effect on the rights of persons other than the Commonwealth. The TCO does not impose any liabilities on any person, and importers can apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The key provisions of the Customs Act 1901, as relevant to Tariff Concession Order No. 1027020, are found primarily in Part XVA (sections 269C, 269B, 269E, 269F, 269P, and 269S). Section 269F allows an application for a Tariff Concession Order (TCO) to be made to the Chief Executive Officer of Customs (CEO) for goods not specified in section 269SJ. If the CEO determines that the application meets the core criteria under section 269C, which includes the absence of substitutable goods produced in Australia, a TCO is issued. Section 269P(3) mandates that the CEO must issue a written TCO if satisfied that the application meets these criteria. In this case, the CEO issued TCO No. 1027020 on 13 September 2010, declaring that certain ball mill inching drive assemblies are subject to a free rate of duty as item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 17 June 2010.
The obligations imposed by the Act on parties include the requirement for the CEO to ensure that the TCO application meets the core criteria, specifically that no substitutable goods are produced in Australia. The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as stipulated in section 269K(1). In this instance, the CEO did not receive any submissions, which facilitated the issuance of the TCO. Importers of the specified goods are now eligible to apply for a refund of duty paid on those goods since the TCO's effective date, under paragraph 126(1)(r) of the Regulations. The Act ensures that the rights of non-Commonwealth persons are not adversely affected by the TCO.
For breaches of the provisions in the Customs Act 1901 or the Customs Tariff Act 1995, including misuse of a TCO, there are both civil and criminal penalties. Civil penalties may include fines and other financial penalties, while criminal penalties can result in imprisonment. The specific penalties depend on the nature and severity of the breach. For example, knowingly making a false statement in an application for a TCO could result in a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. It is essential for parties to comply with the Act's provisions to avoid these potential consequences.