EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1037721
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.
Key Source Rail Pty Ltd applied for a TCO in respect of certain railway maintenance machines on 16 August 2010.
Instrument
TCO No 1037721 was made on 23 December 2010. It declares that those certain railway maintenance 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. 1037721 is taken to have come into force on 16 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 was enacted by the Australian Parliament to regulate the import and export of goods, including the imposition of customs duties. It was introduced to address the need for a comprehensive framework governing the importation and exportation of goods, ensuring revenue generation and protection of domestic industries. Part XVA of the Customs Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) to provide tariff concessions on certain goods. Tariff Concession Instrument No. 1037721 was made on 23 December 2010, providing tariff concessions on certain railway maintenance machines. The instrument was introduced following an application by Key Source Rail Pty Ltd on 16 August 2010, and it became effective from the same date. The instrument aims to benefit importers by granting them the ability to apply for a refund of duty on goods imported since the commencement date, while ensuring that no existing rights or liabilities are adversely affected.
Scope and Application
The Customs Act 1901 applies to individuals and entities involved in the importation of goods into Australia, specifically under Part XVA which governs the scheme for Tariff Concession Orders (TCOs). This scheme allows for the application of a lower rate of customs duty on specified goods, provided that certain criteria are met. The Act applies to any person who wishes to apply for a TCO on behalf of goods that are not listed in section 269SJ, which excludes certain goods from eligibility for tariff concessions. The geographic reach of the Act is national, with the authority to make TCOs exercised by the Chief Executive Officer of Customs. The application of the Act is extended through subordinate instruments, specifically through the Customs Tariff Act 1995, which specifies the reduced duty rates applicable to the goods subject to a TCO. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the concession, and it does not impose any liabilities on these individuals or entities in relation to actions taken prior to the TCO's effective date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1037721, under the Customs Act 1901, concern the process and criteria for making a Tariff Concession Order (TCO) for certain railway maintenance machines. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO, provided the goods are not those specified in section 269SJ, which are ineligible for a TCO. If the application is deemed valid, the CEO must consider if it meets the core criteria set out in section 269C, which requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definition of terms such as "substitutable goods" and "ordinary course of business" is given in sections 269D and 269E respectively. Once the CEO is satisfied that the application meets the core criteria, a TCO must be made as per section 269P(3), specifying the new rate of customs duty.
The Act imposes several obligations and requirements on the parties involved. The CEO of Customs must review any application for a TCO and determine whether it meets the eligibility criteria, particularly ensuring that no substitutable goods were produced in Australia on the date of the application. The CEO is also mandated to publish a notice in the Gazette, as per subsection 269K(1), inviting any interested parties to submit objections to the TCO. Additionally, the CEO must ensure that the rights of persons other than the Commonwealth are not adversely affected by the TCO. For the affected importers, section 126(1)(r) of the Regulations provides the right to apply for a refund of duty on goods imported since the TCO came into force.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in significant consequences. While the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breach of the TCO, the Act generally provides for substantial penalties for non-compliance with customs regulations. For instance, section 269A of the Customs Act 1901 outlines penalties for false statements or misleading information provided in an application for a TCO, which may include fines or imprisonment. Additionally, importers who fail to comply with the refund process under section 126(1)(r) of the Regulations could face financial penalties or other enforcement actions by Customs. The maximum penalties, however, are not specified in the explanatory statement and would need to be referred to in the relevant sections of the Act or subsidiary legislation.