EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1040998
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.
Ebm Papst A&NZ Pty Ltd applied for a TCO in respect of certain motors on 03 September 2010.
Instrument
TCO No 1040998 was made on 29 November 2010. It declares that those certain motors 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. 1040998 is taken to have come into force on 03 September 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, provides a framework for the administration of customs duties and the regulation of the import and export of goods. The Act was introduced to address the need for a systematic approach to managing customs duties and the flow of goods across Australia’s borders. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) to provide relief from customs duty on certain goods under defined circumstances. The explanatory statement for Tariff Concession Instrument No. 1040998 details how Ebm Papst A&NZ Pty Ltd applied for a TCO for certain motors, which was granted as no substitutable goods were produced in Australia, thereby meeting the core criteria. This concession reduces the duty on these motors from 5% to free, effective from the date the application was lodged. The instrument was published in the Gazette, inviting any objections, none of which were received. The policy objective behind these concessions is to support Australian industries by reducing the cost of imported goods that have no local substitutes, thus encouraging competitive practices and economic efficiency.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs. These orders apply to goods that meet certain criteria, allowing for a lower rate of customs duty to be applied. The Act applies to individuals and entities that seek tariff concessions for goods that are not produced in Australia in the ordinary course of business and do not fall under the exclusions specified in section 269SJ of the Act. This instrument extends to the entire Commonwealth of Australia and its territories, with its reach determined by the legislative framework of the Customs Act and the Customs Tariff Act 1995. Notably, the application process requires public consultation, as outlined in section 269K(1), although in the case of TCO No. 1040998, no submissions were received. The commencement of the TCO is effective from the date the application was lodged, which in this instance was 03 September 2010. The TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person other than the Commonwealth.
Key Provisions
The key operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the application meets the core criteria set out in section 269C, the CEO must make a TCO, as per section 269P. This order then specifies a lower rate of customs duty for the goods, effective from the date of the application as per section 269S. This legal framework ensures that goods eligible for a TCO are identified and taxed appropriately.
The Customs Act imposes several obligations and requirements on the parties involved. The CEO must determine whether an application for a TCO meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO must also ensure that the goods specified in the application are not those listed in section 269SJ, which cannot be subject to a TCO. If the application satisfies these criteria, the CEO is required to make a TCO and publish a notice in the Gazette inviting submissions from interested parties. This process ensures transparency and allows for stakeholder input before a TCO is made.
Failure to comply with the provisions of the Customs Act can result in various consequences. For instance, if a person knowingly or negligently makes a false statement in an application for a TCO, they may face criminal charges under section 272A, which carries a penalty of up to five years imprisonment. Additionally, under section 272B, a person who intentionally contravenes a provision of the Act faces a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both, if convicted in a court. These penalties underscore the importance of adhering to the legal requirements and maintaining the integrity of the customs duty system.
The Tariff Concession Order No. 1040998 specifically addresses the application for a TCO by Ebm Papst ANZ Pty Ltd for certain motors. The order declares that these motors are subject to item 50 of Schedule 4 to the Tariff, with a duty rate of free, effective from 3 September 2010. This order exemplifies the application of the Customs Act's provisions to reduce customs duties on specific goods, thereby benefiting importers who can now import these motors without incurring duty charges. The CEO's decision to make this TCO was based on the absence of substitutable goods produced in Australia, fulfilling the core criteria outlined in the Act.
The Customs Act also mandates that the CEO must publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not be made. In this instance, the CEO did not receive any submissions in response to this invitation, indicating that there were no objections to the making of the TCO. This transparent process ensures that all relevant parties have an opportunity to voice their concerns, contributing to a fair and balanced outcome. The TCO does not affect the rights of any person other than the Commonwealth, as it does not impose any liabilities and allows for the refund of duty on goods imported since the date the TCO came into force.