EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1048396
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.
BGC (Australia) Pty Ltd applied for a TCO in respect of certain trailer mounted, cement conveying ship unloaders on 29 October 2010.
Instrument
TCO No 1048396 was made on 25 January 2011. It declares that those certain trailer mounted, cement conveying ship unloaders 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. 1048396 is taken to have come into force on 29 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, includes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). The problem this legislation aims to address is the facilitation of lower rates of customs duty on goods that are subject to a TCO, provided that certain criteria are met, such as the absence of substitutable goods produced in Australia. BGC (Australia) Pty Ltd applied for a TCO in respect of certain trailer-mounted, cement-conveying ship unloaders, and Instrument TCO No 1048396 was subsequently made on 25 January 2011, following satisfaction by the CEO that no substitutable goods were produced in Australia. This TCO, which came into force on 29 October 2010, provides for a free rate of duty on these goods, in contrast to the general rate of 5%. The policy objective, as stated in the explanatory statement, is to provide tariff concessions that do not disadvantage any person other than the Commonwealth and do not impose liabilities on persons in respect of actions taken prior to the registration date.
Scope and Application
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) which can lower customs duty rates on specific goods, as per section 269F. The act applies to any person who can apply for a TCO on behalf of goods that are not specified in section 269SJ and meet the core criteria outlined in section 269C. The Chief Executive Officer of Customs (CEO) evaluates these applications to determine if no substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. Once the CEO determines that the application meets the criteria, a TCO is issued under section 269P(3) to reduce the duty on the specified goods, as seen in TCO No. 1048396 for trailer mounted, cement conveying ship unloaders. This act extends across the Commonwealth of Australia and applies to both individuals and entities involved in the importation of the specified goods. Notably, the TCO does not affect existing rights or impose liabilities on any person other than the Commonwealth, thereby safeguarding the interests of importers who can benefit from refunds on duties paid before the TCO's effective date.
Key Provisions
The Tariff Concession Instrument No. 1048396 under the Customs Act 1901 outlines the process and conditions for granting tariff concessions on specific goods. The primary operative section is section 269F, which allows an individual to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO determines that the application does not involve goods specified in section 269SJ—those ineligible for a TCO—they must then assess whether the application meets the core criteria outlined in section 269C. This section stipulates that the application is valid if no substitutable goods were produced in Australia at the time the application was lodged.
Section 269P(3) then mandates that if the CEO confirms the application meets the core criteria, they must issue a written TCO specifying the goods and the applicable item from Schedule 4 of the Customs Tariff Act 1995. For example, TCO No. 1048396 was issued for certain trailer-mounted, cement-conveying ship unloaders, reducing their duty rate from 5% to free. The obligations placed on the CEO include ensuring that the application adheres to the specified criteria and publishing a notice in the Gazette inviting submissions from any interested parties. In this case, no submissions were received.
Section 269K(1) requires the CEO to take certain actions as soon as practicable after accepting the TCO application, including publishing the notice. The TCO comes into force on the day the application is lodged, as per section 269S(1). For TCO No. 1048396, this means it was effective from 29 October 2010. Importantly, the TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on them for actions taken before the TCO's effective date. Importers can benefit from the TCO by applying for a refund of duty on goods imported since the TCO's effective date, as permitted under paragraph 126(1)(r) of the Regulations.
Breaching the requirements of the Customs Act 1901 or the regulations under it can lead to various consequences. Section 283 of the Act imposes penalties for non-compliance, including fines and imprisonment. For instance, knowingly making a false statement or providing misleading information can result in fines up to $12,600 for individuals and $63,000 for corporations, along with potential imprisonment terms. Additionally, section 284 outlines civil penalties for breaches, such as failing to comply with an order or regulation, which can result in fines up to $126,000 for individuals and $630,000 for corporations. The Act also provides for the recovery of duty and other charges from importers who do not comply with its provisions.