EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045417
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.
Ford Motor Co applied for a TCO in respect of certain compression ignition engine trucks on 07 October 2010.
Instrument
TCO No 1045417 was made on 07 January 2011. 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. 1045417 is taken to have come into force on 07 October 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 Commonwealth Parliament, establishes a framework for the administration of customs and excise duties in Australia. The Act includes provisions under Part XVA which enable the Chief Executive Officer (CEO) of Customs to make Tariff Concession Orders (TCOs). These orders provide a reduced rate of customs duty on specified goods. Ford Motor Co applied for a TCO on certain compression ignition engine trucks on 7 October 2010. The CEO was satisfied that no substitutable goods were produced in Australia at the time of the application and made Tariff Concession Order No. 1045417 on 7 January 2011, declaring that the trucks are subject to a duty rate of free, down from the general rate of 5%. The order came into effect on the date the application was lodged. The CEO published a notice in the Gazette inviting submissions on the application, but none were received. The policy objective of the TCO scheme is to facilitate access to essential goods by reducing customs duty when no suitable Australian-made alternatives exist.
Scope and Application
The Tariff Concession Instrument No. 1045417 under the Customs Act 1901 applies to the importation of certain compression ignition engine trucks, which Ford Motor Co sought a tariff concession for. The instrument was issued in response to an application by Ford Motor Co on 07 October 2010, and it came into effect on the same date. The instrument applies to any person or entity importing the specified trucks into Australia, with the condition that no substitutable goods were produced in Australia on the day the application was lodged. The primary effect of the instrument is to lower the customs duty on these specific trucks from the general rate of 5% to free, provided the aforementioned condition is met. The instrument operates on a national level, applying across all states and territories of Australia. The application process and the criteria for granting such tariff concessions are clearly defined within the Customs Act 1901, with specific exclusions outlined for goods that cannot be subject to a tariff concession order. The instrument does not disadvantage any existing rights of persons other than the Commonwealth and does not impose any new liabilities on individuals or entities.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1045417, made under the Customs Act 1901, establish the criteria and procedures for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. Specifically, section 269C (2) of the Act details that a TCO application is considered to meet the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) requires that if the CEO is satisfied that an application meets these criteria, they must issue a written order declaring the goods subject to the TCO application as eligible for a prescribed rate of customs duty. In this instance, TCO No. 1045417 declares that certain compression ignition engine trucks are subject to a rate of duty of free, as opposed to the general rate of 5% (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. The CEO of Customs is required to assess TCO applications to determine whether they meet the core criteria, specifically whether substitutable goods were being produced in Australia at the time of application. This is detailed in section 269C of the Act. If the CEO is satisfied that the application meets the core criteria, they must issue a TCO (section 269P(3)). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made, although in this case, no submissions were received. Importers, as beneficiaries of the TCO, must also comply with any procedural requirements to apply for a refund of duty on goods imported since the TCO came into force, as outlined in paragraph 126(1)(r) of the Regulations.
Breaches of the obligations and requirements outlined in the Customs Act 1901 may result in various consequences. For instance, failure to comply with the provisions related to the issuance and operation of TCOs could potentially result in the nullification of the concession, leading to the application of the standard rate of customs duty. While the explanatory statement does not specify penalties for non-compliance, breaches of the Customs Act generally may result in criminal or civil penalties, depending on the nature and severity of the breach. For example, section 261 of the Customs Act imposes penalties for offences including the evasion of duty, which could be relevant if a TCO is improperly applied or if there is an attempt to benefit from the concession without meeting the eligibility criteria.