EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1034879
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.
Formero Pty Ltd applied for a TCO in respect of certain selective laser melting process machines on 29 July 2010.
Instrument
TCO No 1034879 was made on 25 October 2010. It declares that those certain selective laser melting process 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. 1034879 is taken to have come into force on 29 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 by the Parliament of Australia to regulate the importation and exportation of goods, including the imposition and collection of customs duty. The Act was introduced to address the need for a comprehensive legal framework governing the customs process, including the establishment of a mechanism for tariff concessions. Tariff Concession Orders (TCOs) allow for a lower rate of customs duty on specified goods, provided they meet certain criteria, such as the absence of substitutable goods produced in Australia. The Explanatory Statement for Tariff Concession Instrument No. 1034879 clarifies the process by which the Chief Executive Officer of Customs (CEO) assesses and approves applications for TCOs, ensuring that these orders comply with the requirements set out in the Customs Act. This instrument aims to facilitate trade by providing tariff relief to importers of certain goods, enhancing the competitiveness of Australian industries and supporting economic growth.
Scope and Application
The Tariff Concession Instrument No. 1034879 under the Customs Act 1901 pertains to the concession of customs duties for specific goods, in this instance, certain selective laser melting process machines. The application of this Act is directed towards any person or entity that imports the specified goods, providing them with a tariff concession that results in a lower rate of customs duty. The scope of the Act encompasses goods for which a Tariff Concession Order (TCO) can be applied, ensuring that these goods are not produced in Australia in the ordinary course of business. The Act's jurisdiction extends across the Commonwealth of Australia, impacting the import duties levied on these particular goods. The Act does not explicitly exclude any categories of goods or entities from its application, though it does note that goods specified in section 269SJ of the Act, which cannot be subject to a TCO, are not eligible. The Act may be further defined or extended through subordinate instruments, although no such instruments are specified in this context.
Key Provisions
The Customs Act 1901 provides for the creation of Tariff Concession Orders (TCOs) which offer a lower rate of customs duty on specified goods. Section 269F of the Act allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO. If the CEO determines that the application is not for goods that cannot be subject to a TCO (section 269SJ) and that the application meets the core criteria (section 269C), a TCO will be made. The core criteria require that, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of key terms such as 'substitutable goods', 'goods produced in Australia', and 'ordinary course of business' are provided in sections 269B, 269D, and 269E respectively.
The CEO's obligations under the Act include deciding whether to make a TCO if the application meets the core criteria (section 269P(3)), publishing a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)), and ensuring that the TCO does not disadvantage any person or impose liabilities on any person other than the Commonwealth in respect of actions taken before the TCO comes into effect (subsection 269S(1)). Formero Pty Ltd applied for a TCO for certain selective laser melting process machines, and the CEO issued TCO No. 1034879 on 25 October 2010, declaring that the specified machines are subject to a free rate of duty.
The Act imposes specific consequences for breaches of its provisions. While the explanatory statement does not detail specific offences or penalties for breaches of TCO provisions, general penalties for breaches of the Customs Act 1901 may include fines and imprisonment. The maximum penalties can vary depending on the nature and severity of the breach. For instance, under section 236 of the Act, contravening a prohibition or restriction can result in penalties of up to $22,200 for individuals and $111,000 for bodies corporate, along with potential imprisonment terms. Therefore, entities and individuals must comply with the provisions to avoid these legal consequences.