EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1035606
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.
Wesbeam Pty Ltd applied for a TCO in respect of certain timber laying machines on 03 August 2010.
Instrument
TCO No 1035606 was made on 25 October 2010. It declares that those certain timber laying 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. 1035606 is taken to have come into force on 03 August 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, enacted by the Australian Parliament, addresses the need for a flexible tariff system that accommodates specific economic and trade policy objectives. One such mechanism is the Tariff Concession Order (TCO), which allows for reduced customs duties on certain goods. This flexibility is intended to foster fair competition and support Australian industries by providing tariff relief where domestic production of substitutable goods is not feasible. The explanatory statement for Tariff Concession Instrument No. 1035606, issued under this Act, clarifies the application process and the criteria for granting such concessions, ensuring transparency and adherence to the legislative framework. In this instance, the instrument was introduced to provide a tariff concession for certain timber laying machines, recognising the absence of substitutable goods produced in Australia and thus granting a duty-free status to these specific goods.
Scope and Application
The Tariff Concession Instrument No. 1035606, issued under the Customs Act 1901, applies to individuals or entities seeking tariff concessions on imported goods, specifically in this case, certain timber laying machines. This instrument is applicable on a national level across Australia, encompassing the entire Commonwealth, and is administered by the Chief Executive Officer of Customs. The instrument’s primary function is to facilitate the application of tariff concessions for goods that are not produced in Australia in the ordinary course of business, thereby ensuring that importers are not disadvantaged by domestic production. The application process involves an assessment by the CEO of Customs to determine if the goods meet the criteria for a tariff concession order. The TCO No. 1035606, effective from 03 August 2010, provides that the specified timber laying machines are subject to a zero percent duty rate, down from the general rate of 5%, provided no substitutable goods are produced domestically. The instrument also mandates the publication of the application in the Gazette to allow for public submissions, although in this instance, no objections were received.
Key Provisions
The main sections of the Tariff Concession Instrument No. 1035606, made under the Customs Act 1901, concern the process and requirements for applying for and receiving a Tariff Concession Order (TCO). Section 269F (1) and (2) allow an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. The CEO must then assess whether the application meets the core criteria outlined in section 269C of the Act. These criteria include the condition that, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269D and 269E). If the CEO determines that the application meets these criteria, a TCO is to be made under section 269P(3), specifying the applicable duty on the goods.
The obligations imposed by the Act on the parties involve several steps. Firstly, any person seeking a TCO must submit an application to the CEO, ensuring that the application is valid and meets the core criteria (section 269F). The CEO must then 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)). Following this, the CEO must make a written TCO if the application meets the core criteria (section 269P(3)). The TCO specifies the reduced rate of customs duty applicable to the goods in question.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could lead to civil or criminal consequences. For instance, incorrect or fraudulent applications for TCOs could result in penalties under section 284-10 of the Crimes Act 1914, which pertains to fraud against the Commonwealth. The penalties for such offences can include fines up to $210,000 or imprisonment for up to 10 years, or both. Furthermore, any person found to be deliberately evading customs duty by misapplying a TCO could face penalties under section 130 of the Customs Act 1901, which includes fines and imprisonment.