EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1047398
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.
Hitachi Construction Machinery (Australia) P/L applied for a TCO in respect of certain earthmover parts on 22 October 2010.
Instrument
TCO No 1047398 was made on 12 January 2011. It declares that those certain earthmover 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. 1047398 is taken to have come into force on 22 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 was enacted by the Australian Parliament to provide a comprehensive framework for the administration of customs and excise duties, amongst other things. The Act was introduced to address the need for a streamlined and efficient process for the regulation of customs and excise within Australia. Under the Act, Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, which allow for a lower rate of customs duty to apply to specified goods. This scheme aims to encourage the production and use of certain goods within Australia by providing financial incentives to importers and manufacturers. Hitachi Construction Machinery (Australia) P/L applied for a TCO in respect of certain earthmover parts on 22 October 2010. The CEO was satisfied that no substitutable goods were produced in Australia, and therefore, TCO No. 1047398 was made on 12 January 2011, declaring that the certain earthmover parts are goods to which item 50 of Schedule 4 to the Tariff applies. The general rate of duty on these goods is 5%, while the rate of duty for the goods subject to the TCO is free.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, allowing for reduced customs duties on specified goods. The Act applies to any person or entity seeking a TCO for goods that are not specified in section 269SJ, which lists goods ineligible for tariff concessions. The eligibility for a TCO hinges on the absence of substitutable goods produced in Australia, as defined under section 269D, in the ordinary course of business, as outlined in section 269E. The application process mandates the CEO to make a written order if the core criteria are satisfied, as stipulated under section 269C, which leads to the application of a prescribed duty rate as per Schedule 4 of the Customs Tariff Act 1995. The geographic reach of this legislation is national, with the CEO exercising authority under the Commonwealth of Australia. The TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities for actions taken prior to its registration. The instrument, TCO No. 1047398, was made effective from the date of application, 22 October 2010, providing free duty on certain earthmover parts from Hitachi Construction Machinery (Australia) P/L, following the CEO's satisfaction that no substitutable goods were produced in Australia at the time of the application.
Key Provisions
The Tariff Concession Order (TCO) No. 1047398, as provided under the Customs Act 1901 (section 269F), allows the Chief Executive Officer (CEO) of Customs to apply a lower rate of customs duty on certain goods, in this case, specific earthmover parts. This order was made on 12 January 2011, effective from 22 October 2010, the date the application was lodged. The TCO was issued because the CEO was satisfied that no substitutable goods were being produced in Australia at the time the application was made, fulfilling the core criteria outlined in section 269C of the Act. As a result, the goods in question are subject to a zero duty rate, instead of the usual 5% general rate of duty.
Under the Act, the CEO is required to ensure that a TCO application meets specific criteria before making the order. These criteria include verifying that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Additionally, the CEO must ensure that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, as defined by sections 269D, 269E, and 269B of the Act. The CEO must also publish a notice in the Gazette inviting any objections to the TCO application (subsection 269K(1)), although no objections were received in this case.
The Act imposes certain obligations on both the CEO and applicants for a TCO. The CEO must rigorously assess applications against the core criteria to ensure they are valid and publish notices to allow for objections. Applicants, on the other hand, must provide all necessary information to substantiate their claims that substitutable goods are not being produced in Australia. Failure to meet these obligations can lead to the rejection of an application or the invalidity of a TCO.
Failure to comply with the requirements of the Customs Act 1901 or the Tariff Concession Order can lead to various civil or criminal consequences. While the explanatory statement does not specify the exact penalties for non-compliance, it is known that breaches of the Act can result in fines or imprisonment under section 282. The maximum penalties for breaches of the Customs Act can include substantial fines and imprisonment terms, depending on the severity and intent of the breach. Additionally, any person found to be improperly benefiting from a TCO may face further penalties, including the requirement to repay any improperly received tariff concessions.