EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1042992
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.
Mercedes Benz Australia Pacific applied for a TCO in respect of certain compression ignition engine trucks on 20 September 2010.
Instrument
TCO No 1042992 was made on 13 December 2010. It declares that those certain compression ignition engine trucks 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. 1042992 is taken to have come into force on 20 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 Tariff Concession Instrument No. 1042992, enacted under the Customs Act 1901, addresses the issue of providing tariff concessions for specific goods by authorising the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs). The Customs Act 1901, specifically Part XVA, allows for the application of a lower rate of customs duty to goods that are the subject of a TCO. This legislative instrument was introduced to facilitate the process of granting tariff concessions for goods where no substitutable goods are produced in Australia. The instrument was developed by the Commonwealth of Australia and its policy objective is to ensure that the application for tariff concessions is processed efficiently and fairly, while also providing benefits to importers by potentially allowing for duty refunds on goods imported since the TCO came into force.
The instrument was made on 13 December 2010 in response to an application by Mercedes Benz Australia Pacific for tariff concessions on certain compression ignition engine trucks. The CEO of Customs was satisfied that no substitutable goods were produced in Australia, leading to the declaration that these trucks are subject to a zero duty rate, as opposed to the general duty rate of 5%. The instrument came into force on 20 September 2010, the date on which the application was lodged, and does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person. The CEO published a notice in the Gazette inviting submissions from interested parties, but none were received.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a mechanism for reducing the customs duty on specific goods when certain criteria are met. This legislative instrument applies to any entity or individual seeking to import goods that can qualify for a lower rate of customs duty under the Act. The scope of the Act is national, as it falls under the Commonwealth jurisdiction, and it extends to any goods that meet the specified conditions for tariff concessions. The Act excludes certain goods as outlined in section 269SJ, which details those goods that cannot be subject to a TCO. The application process involves a thorough evaluation by the Chief Executive Officer of Customs (CEO) to determine if the goods meet the core criteria, particularly focusing on the absence of substitutable goods produced in Australia at the time of application. This process ensures that the tariff concessions are granted fairly and in compliance with the legislative framework. The instrument can be further defined and applied through subordinate regulations, which may provide additional details on the application process and eligibility criteria.
Key Provisions
The Tariff Concession Instrument No. 1042992, established under the Customs Act 1901, introduces tariff concessions for certain goods. Specifically, section 269F allows a person to apply for a Tariff Concession Order (TCO) to the Chief Executive Officer of Customs (CEO). If the CEO determines that the application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia, they must issue a TCO. The TCO then declares the goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)). For instance, in this case, certain compression ignition engine trucks have been granted a tariff concession, reducing their duty rate from 5% to free.
The Act imposes several obligations on the CEO. Once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette, inviting submissions from any interested parties (subsection 269K(1)). Additionally, the CEO is required to ensure that no substitutable goods are produced in Australia on the day the application is lodged (section 269C). If these conditions are met, the CEO must proceed to issue the TCO. The TCO also ensures that it does not disadvantage any person, other than the Commonwealth, or impose liabilities on anyone in respect of actions taken before the date of registration (subsection 269S(1)).
The Customs Act 1901 does not explicitly outline specific offences or penalties for breaches related to TCOs. However, any breach of the Act’s general provisions could result in penalties as outlined in other sections of the Act. For instance, fraudulent applications or misuse of tariff concessions might lead to criminal charges under sections dealing with fraud or false statements. Additionally, the CEO might face administrative penalties if they fail to comply with the procedural requirements for issuing TCOs. However, the explanatory statement does not provide specific maximum penalties for these potential breaches.