EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1047613
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.
NSK Australia Pty Ltd applied for a TCO in respect of certain tapered roller bearing parts on 25 October 2010.
Instrument
TCO No 1047613 was made on 12 January 2011. It declares that those certain tapered roller bearing 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. 1047613 is taken to have come into force on 25 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 Parliament of Australia, provides for the establishment of a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). This scheme was introduced to address the issue of applying lower rates of customs duty to goods that meet certain criteria, thereby encouraging trade and economic efficiency. NSK Australia Pty Ltd sought to benefit from this scheme by applying for a TCO for certain tapered roller bearing parts on 25 October 2010. After evaluating the application, the CEO determined that no substitutable goods were produced in Australia, satisfying the core criteria set out in section 269C of the Act. Consequently, TCO No. 1047613 was issued on 12 January 2011, declaring that these specific goods are subject to a zero-duty rate, as opposed to the general rate of 5%. The TCO came into effect on the date the application was lodged, and it does not impose any liabilities on any person, although it does provide benefits to importers by allowing them to apply for duty refunds.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders scheme, facilitates the reduction or exemption of customs duty on specific goods, provided certain conditions are met. This legislation applies to individuals and entities seeking to import goods into Australia, specifically those who wish to avail themselves of reduced customs duties under the TCO scheme. The Act's application extends to any goods not listed in section 269SJ, which includes items that are not eligible for tariff concessions. The primary condition for eligibility is that the goods in question must not have substitutable alternatives produced in Australia. The geographic scope of the Act is national, as it pertains to customs duties across Australia, and its provisions are enforced under federal law. The Act also includes provisions for the Chief Executive Officer of Customs to publish notices in the Gazette, inviting public submissions on TCO applications, although in this instance, no submissions were received. The commencement of a TCO, as indicated by TCO No. 1047613, is effective from the date the application is lodged, ensuring that the rights of importers are protected from any retroactive disadvantage or liabilities.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269P(3), and 269SJ of the Customs Act 1901, which provide the criteria for the making of a Tariff Concession Order (TCO) and the circumstances under which the Chief Executive Officer of Customs (CEO) may grant such an order. Section 269F allows a person to apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is valid and meets the criteria in section 269C, they must make a written order, which is the TCO (section 269P(3)). Importantly, section 269SJ lists the goods that cannot be the subject of a TCO.
The Act imposes several obligations and requirements on the parties involved. The CEO must ensure that any application for a TCO is not in respect of goods specified in section 269SJ of the Act. If the CEO is satisfied that the application meets the core criteria, they must make a TCO, as specified in section 269P(3). The CEO is also required to publish a notice in the Gazette inviting submissions from interested parties if they consider there are reasons why the TCO should not be made (subsection 269K(1)). Additionally, 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 in respect of anything done or omitted to be done before the date of registration.
The Customs Act 1901 and associated regulations do not specify any particular offences or penalties for breaches related to TCOs. However, any breach of the terms and conditions of a TCO could potentially lead to civil or criminal consequences depending on the specific circumstances of the breach. For example, if a person knowingly imports goods that are subject to a TCO and does not avail themselves of the tariff concession, they could potentially be liable for the full duty on those goods. It is important to note that while the Act does not explicitly outline penalties for breaches, the general legal framework provides for enforcement actions, including fines and potential imprisonment for serious breaches of customs regulations.
In summary, the legislation provides a framework for the application and granting of Tariff Concession Orders by the CEO, ensuring that the process is transparent and that the rights of all parties are protected. The Act specifies the conditions under which a TCO can be granted, the obligations of the CEO, and the rights of importers who may benefit from such orders. While the specific penalties for breaches are not outlined in the text, any breach of the terms of a TCO could lead to civil or criminal consequences.