EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1034710
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.
Menard Bachy Pty Ltd applied for a TCO in respect of certain soil compaction machines on 28 July 2010.
Instrument
TCO No 1034710 was made on 25 October 2010. It declares that those certain soil compaction machines 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. 1034710 is taken to have come into force on 28 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 Tariff Concession Instrument No. 1034710 was enacted under the Customs Act 1901 to address the need for tariff concessions on specific imported goods, ensuring they receive a lower rate of customs duty when no substitutable goods are produced in Australia. This instrument was introduced to provide relief to businesses that rely on importing certain goods that are not produced domestically, thereby encouraging fair competition and supporting industries where local production is not viable. The instrument was developed by the Chief Executive Officer of Customs, acting under the authority granted by section 269F of the Customs Act 1901, and was implemented to meet the core criteria outlined in section 269C. The policy objective behind this concession is to facilitate trade by reducing the cost burden on importers, thereby promoting economic efficiency and competitiveness within the relevant sectors.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO) to offer reduced customs duties on certain goods. This process applies to individuals or entities seeking to import goods that qualify under the scheme. The core criteria for a TCO, outlined in section 269C of the Act, require that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business. The application process and subsequent decision-making by the CEO are governed by these statutory provisions, with section 269SJ specifying the types of goods that are ineligible for tariff concessions. The application of a TCO is national in scope and operates under the purview of the Commonwealth. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting submissions from interested parties, though in this instance, no objections were received. Once a TCO is issued, it applies retroactively from the date of application lodging, as stipulated by subsection 269S(1) of the Act, and benefits importers by potentially allowing them to claim refunds on duties paid prior to the TCO’s effective date. Importantly, the TCO does not retroactively affect or impose any liabilities on parties for actions taken before its issuance, ensuring that existing rights are protected.
Key Provisions
The main operative sections of this legislation are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S of the Customs Act 1901, which establish the criteria for Tariff Concession Orders (TCOs) and the process for their application and approval. Specifically, section 269F allows for the application for a TCO, while section 269C sets out the core criteria that the application must meet, including that no substitutable goods are produced in Australia at the time the application is lodged. Sections 269B, 269D, and 269E define key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, section 269P requires the CEO to make a written order (a TCO) declaring that the goods are subject to the prescribed tariff concession. Section 269S provides that the TCO is taken to have come into force on the day the application was lodged.
The Customs Act 1901 imposes several obligations on the parties involved in the TCO process. The CEO must review the TCO application to determine if it meets the core criteria (section 269C) and, if so, make a written order (section 269P). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In the case of TCO No 1034710, the CEO was satisfied that the application met the core criteria and no submissions were received in response to the Gazette notice. Importers of the goods subject to the TCO have the right to apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations).
Breaching the requirements of the Customs Act 1901 or failing to comply with a TCO can result in civil or criminal penalties. While the explanatory statement does not specify the penalties, breaches of the Customs Act 1901 can generally lead to civil penalties, including fines, and criminal penalties, including imprisonment. For example, section 244 of the Act provides that a person who contravenes certain provisions of the Act can be fined up to 120 penalty units or imprisoned for up to two years, or both, for a first offence. The maximum penalties for subsequent offences are higher. The specific penalties for breach of a TCO would depend on the nature of the breach and the relevant provisions of the Customs Act 1901 and any associated regulations.