EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054832
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.
CATERPILLAR S.A.R.L. applied for a TCO in respect of certain accumulators on 16 December 2010.
Instrument
TCO No 1054832 was made on 22 September 2011. It declares that those certain accumulators 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. 1054832 is taken to have come into force on 16 December 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 Tariff Concession Instrument No. 1054832 was enacted under the Customs Act 1901 to provide a tariff concession on certain goods, specifically accumulators, by the Chief Executive Officer of Customs. This legislation was introduced to address the gap in duty concessions for imported goods that do not have Australian-made equivalents. The policy objective is to facilitate trade by reducing customs duty on specific goods, thereby making them more competitively priced and accessible. The instrument was made on 22 September 2011, following an application by Caterpillar S.A.R.L., and came into effect on 16 December 2010, the date the application was lodged. This legislative action was taken without any adverse submissions, ensuring that the rights of importers are positively impacted, with potential duty refunds available for imports since the effective date of the concession.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 1054832, applies to goods that are the subject of a Tariff Concession Order (TCO). This legislation facilitates the reduction of customs duty for specific goods provided that no substitutable goods are produced in Australia in the ordinary course of business. The TCO process involves an application to the Chief Executive Officer of Customs (CEO), who assesses whether the application meets the core criteria outlined in the Act. Specifically, the CEO must determine if, on the day the application was lodged, no substitutable goods were produced in Australia. If these criteria are satisfied, the CEO issues a written TCO, effectively reducing the duty on the specified goods. The TCO's application is national in scope, affecting all entities and individuals involved in the importation of the specified goods within Australia.
Section 269SJ of the Act excludes certain goods from TCO eligibility, such as those specified in that section. The TCO's geographic reach is limited to Australia, with no submissions received in opposition to the TCO. The TCO is retroactive to the date of application lodging, which in this case is 16 December 2010, and it does not affect any existing rights or impose liabilities on individuals or entities other than the Commonwealth. The rights of importers are positively impacted, as they can apply for duty refunds for goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the granting of Tariff Concession Orders (TCOs) under section 269F. Section 269C outlines the core criteria that must be met for a TCO to be issued by the Chief Executive Officer of Customs (the CEO). 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, as defined by sections 269D and 269E of the Act. If the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)) declaring that the goods in question are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), resulting in a lower rate of duty.
The obligations imposed on parties under the Act are primarily directed towards the CEO. Upon receiving a TCO application, the CEO must determine whether it meets the core criteria, and if so, issue a TCO. The CEO is also required to publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any interested parties who may have reasons to oppose the TCO. This notice must be published as soon as practicable after accepting the application as valid. In the case of TCO No 1054832, no submissions were received in response to the published notice.
In terms of compliance, the Act and its associated regulations stipulate certain consequences for breaches. While the Act does not explicitly outline criminal or civil penalties for non-compliance with TCOs, breaches of related customs regulations could lead to criminal charges and penalties, including fines and imprisonment. For instance, under section 235 of the Customs Act, engaging in activities that contravene the Act, including fraudulent claims for tariff concessions, could result in significant penalties. The maximum penalty for serious breaches can be substantial, reflecting the seriousness of such actions.
The Act also ensures that the implementation of a TCO does not adversely affect the rights of any person other than the Commonwealth (subsection 269S(1)). Specifically, a TCO does not impact the rights of a person as at the date of registration in a way that would disadvantage them or impose liabilities in respect of actions taken before the registration date. However, importers stand to benefit as they can apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. This provision ensures that importers are not unfairly disadvantaged by the retroactive application of the TCO.