EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1042814
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.
Maxwell Engineering applied for a TCO in respect of certain rolling stock door parts on 17 September 2010.
Instrument
TCO No 1042814 was made on 13 December 2010. It declares that those certain rolling stock door parts 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. 1042814 is taken to have come into force on 17 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 Parliament of Australia, addresses the need for a regulatory framework to manage the importation of goods and the imposition of customs duties. This Act establishes a mechanism for the Chief Executive Officer of Customs to grant tariff concession orders (TCOs) that can lower the rate of customs duty on specific goods. The primary objective of these concessions is to encourage the importation of goods that are not produced domestically, thus supporting trade and economic activity. Tariff Concession Instrument No. 1042814, made under the authority of this Act, was introduced to provide a zero-duty rate for certain rolling stock door parts, effective from the date of application on 17 September 2010. This measure was designed to reduce costs for importers and stimulate the market for these specific goods by ensuring that no substitutable products were being produced in Australia at the time of application.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs), applies to any person or entity wishing to import goods eligible for a tariff concession, thereby reducing customs duty on specified goods. These orders are applicable nationally across Australia and are administered by the Chief Executive Officer of Customs, who must determine if an application for a TCO meets the core criteria, such as the absence of substitutable goods produced in Australia. Exemptions include goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The geographic reach of the Act is nationwide, ensuring uniformity in tariff application across all states and territories. Additionally, the Act may extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the particular duty rates and concessions. The process includes public consultation upon the acceptance of a valid TCO application, although in the case of TCO No 1042814, no submissions were received. The commencement of such orders is effective from the date the application is lodged, thereby protecting the rights of existing importers and enabling potential duty refunds for those who imported the specified goods post-application date.
Key Provisions
The Customs Act 1901, under Part XVA, provides the framework for Tariff Concession Orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO). These orders apply a lower rate of customs duty to goods specified in the TCO (section 269F). An application for a TCO can be submitted by a person to the CEO, provided the goods are not those specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the application does not cover these restricted goods, the CEO must assess if it meets the core criteria stipulated in section 269C. A TCO application meets these criteria if, on the day the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business (section 269C). The terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are defined in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets the core criteria, a written order declaring the specified goods subject to a prescribed rate in Schedule 4 of the Customs Tariff Act 1995 must be issued (subsection 269P(3)).
The obligations imposed by the Act on the CEO include the requirement to publish a notice in the Gazette inviting submissions from any person who might have reasons to oppose the making of the TCO (subsection 269K(1)). This notice must be published as soon as practicable after the CEO accepts the TCO application as valid. The CEO must also ensure that no substitutable goods are being produced in Australia at the time of the application to determine if the core criteria are met. Furthermore, once a TCO is issued, it is deemed to have come into force on the day the application for the TCO was lodged (subsection 269S(1)). In the case of Maxwell Engineering's application for TCO No 1042814 for certain rolling stock door parts, this means the TCO came into force on 17 September 2010.
Breaching the provisions of the Customs Act 1901, particularly in relation to the issuance of TCOs, can lead to several consequences. If the CEO fails to adhere to the legislative requirements, such as not publishing the required notice in the Gazette or improperly issuing a TCO, this could result in legal challenges or administrative penalties. The Act does not specify maximum penalties for breaches directly related to TCOs, but general contraventions of the Customs Act can lead to significant fines and, in severe cases, criminal charges. For instance, knowingly making a false statement in an application for a TCO could lead to penalties under section 231 of the Customs Act, which imposes fines and potential imprisonment. The TCO itself, once issued, does not impose any liabilities on any person other than the Commonwealth, but it does confer rights such as the ability to apply for a refund of duty on goods imported since the TCO came into force.