EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045659
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.
MTU Detroit Diesel Australia Pty Ltd applied for a TCO in respect of certain off highway vehicle transmissions on 08 October 2010.
Instrument
TCO No 1045659 was made on 10 January 2011. It declares that those certain off highway vehicle transmissions 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. 1045659 is taken to have come into force on 08 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 Australian Parliament, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislative instrument aims to address the problem of ensuring that Australian businesses can access necessary goods without being burdened by excessive customs duties, particularly in cases where no substitutable goods are produced domestically. The policy objective behind this act is to foster economic efficiency and competitiveness by potentially reducing the cost of imported goods for businesses. The explanatory statement regarding Tariff Concession Instrument No. 1045659, issued on 10 January 2011, illustrates the application of this legislative framework. In this instance, MTU Detroit Diesel Australia Pty Ltd successfully applied for a TCO concerning certain off-highway vehicle transmissions, resulting in a concession that reduced the customs duty on these goods from 5% to free. This legislative measure ensures that the rights of importers are positively impacted, allowing for potential duty refunds on imports made since the TCO came into effect on 08 October 2010, without imposing any new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This mechanism allows for reduced customs duty rates on specified goods, provided they meet certain criteria as outlined in the Act. Specifically, an applicant can request a TCO if no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied with the application and that it does not pertain to goods excluded under section 269SJ, the application is assessed against the core criteria stipulated in sections 269C, 269B, and 269D of the Act. If these criteria are met, a TCO is issued, granting the specified goods a lower duty rate as outlined in the Customs Tariff Act 1995. This instrument applies to any person or entity seeking tariff concessions for specified goods, and its jurisdictional reach is national, governed under the Commonwealth of Australia. The TCO does not retroactively affect the rights of any party other than the Commonwealth, nor does it impose any new liabilities on persons other than the Commonwealth. The application process requires public notice, inviting any interested parties to submit objections, though in this instance, no submissions were received.
Key Provisions
The primary sections of the Tariff Concession Order (TCO) No. 1045659 under the Customs Act 1901, as outlined in the explanatory statement, involve the application, assessment, and implementation of tariff concessions for certain off-highway vehicle transmissions (section 269F). If an applicant, such as MTU Detroit Diesel Australia Pty Ltd, submits an application to the Chief Executive Officer (CEO) of Customs, the CEO must assess whether the application meets the core criteria set out in sections 269C and 269SJ. Specifically, section 269C requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that these conditions are met, they must issue a written order (section 269P(3)) declaring that the goods are subject to a prescribed tariff item in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved are primarily on the CEO of Customs. The CEO must ensure that any TCO application does not concern goods specified in section 269SJ, which are ineligible for tariff concessions. The CEO must also determine if the application meets the core criteria, particularly focusing on whether substitutable goods were produced in Australia on the day the application was lodged (section 269C). If these criteria are satisfied, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)). Although no submissions were received for TCO No. 1045659, this step is crucial to ensure transparency and fairness in the process.
In terms of legal consequences, the explanatory statement does not explicitly detail specific offences or penalties for breaches related to TCOs. However, the Act generally imposes penalties for non-compliance with customs regulations, which could include fines and, in severe cases, imprisonment. The statement does clarify that the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration, nor does it impose any liabilities on any person for actions taken before the registration date. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). This provision ensures that importers who have already paid duty on the affected goods can seek a refund, thereby realising the benefits of the tariff concession.