EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1033696
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.
Qantas Airways applied for a TCO in respect of certain aircraft cargo loaders on 22 July 2010.
Instrument
TCO No 1033696 was made on 11 October 2010. It declares that those certain aircraft cargo loaders 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. 1033696 is taken to have come into force on 22 July 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 provide a framework for the regulation of customs and excise in Australia, including the imposition of customs duties on imported goods. One of the mechanisms within the Act is the Tariff Concession Order (TCO) scheme, which allows for the reduction or exemption of customs duty on specific goods. This scheme was designed to address economic and trade policy objectives by facilitating the import of goods that are not produced domestically or for which there are no suitable domestic substitutes. The authority to make such orders lies with the Chief Executive Officer of Customs, who must ensure that the application for a TCO meets the specified criteria, including the absence of substitutable goods produced in Australia. The instrument in question, TCO No. 1033696, was introduced following an application by Qantas Airways for tariff concessions on certain aircraft cargo loaders, effective from 22 July 2010. The TCO was made on 11 October 2010, and it exempts these specific goods from the usual customs duty, thereby providing a tariff concession as requested. The instrument was published in the Gazette with an invitation for submissions, none of which were received, and it came into force on the date of the application. This legislative action aims to support economic efficiency and competitive advantage in sectors where domestic production is not viable or practical.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the process by which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to provide a lower rate of customs duty on certain goods. This legislation applies to any person or entity that wishes to apply for a TCO in respect of goods not specified in section 269SJ of the Act, which excludes goods that cannot be subject to a TCO. The Act mandates that the CEO must consider whether the application meets the core criteria, particularly if no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must issue a TCO that specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods. This process was recently applied when Qantas Airways successfully applied for a TCO for certain aircraft cargo loaders, leading to the issuance of TCO No 1033696 on 11 October 2010, which set the duty rate for these goods at free, down from the general rate of 5%. The CEO must also publish a notice in the Gazette inviting submissions from interested parties, although in this case, no submissions were received. The TCO comes into effect on the date the application was lodged, in this instance on 22 July 2010, and does not retroactively affect the rights of any person or impose liabilities for actions taken prior to its registration.
Key Provisions
The Tariff Concession Order (TCO) No. 1033696 under the Customs Act 1901 provides a concessional rate of customs duty for certain aircraft cargo loaders, as detailed in section 269P(3) of the Act. Specifically, section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO. If the CEO determines that the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business, a TCO will be issued. Section 269C outlines that the core criteria are met if no such Australian-made alternatives exist on the date the application is lodged. In this case, the CEO was satisfied that the aircraft cargo loaders in question met these criteria, leading to the issuance of TCO No. 1033696 on 11 October 2010.
The obligations under this Act require that any person seeking a tariff concession must apply to the CEO and provide evidence that the goods in question meet the criteria outlined in section 269C. The CEO is mandated to review the application and determine whether it aligns with the criteria. If satisfied, the CEO must issue a written TCO, as stipulated in section 269P(3). Additionally, the CEO must publish a notice in the Gazette under subsection 269K(1), inviting any interested parties to submit objections or submissions regarding the proposed TCO. In this instance, no submissions were received.
Failing to comply with the provisions of the Customs Act 1901 can result in significant legal consequences. Subsection 269S(1) details that a TCO is effective from the date the application is lodged. Any breach of the conditions or misuse of the TCO could lead to legal action. The Act does not specify particular penalties for non-compliance with TCOs, but general penalties for breaches of the Customs Act include fines and imprisonment as prescribed by other sections of the Act. The seriousness of the breach would determine the exact penalty imposed.
The rights of importers and other stakeholders are protected under this legislation. Specifically, section 269S(1) ensures that the TCO does not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO's effective date. Importers can benefit from this by applying for a refund of duty on goods imported since the TCO came into effect, as outlined in paragraph 126(1)(r) of the Regulations. This ensures that no person other than the Commonwealth suffers due to the issuance of the TCO.