EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1054837
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.
SKF Australia Pty Ltd applied for a TCO in respect of certain ball bearings on 16 December 2010.
Instrument
TCO No 1054837 was made on 16 March 2011. It declares that those certain ball bearings 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. 1054837 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 Customs Act 1901, through its Tariff Concession Orders scheme, was enacted to provide a mechanism whereby the Chief Executive Officer of Customs can grant tariff concessions on specific goods, thereby reducing the customs duty on those goods. The Tariff Concession Instrument No. 1054837, made in 2011, is an example of this process, where certain ball bearings received a concession resulting in a reduction of duty from 5% to free. This instrument was introduced in response to an application by SKF Australia Pty Ltd, which demonstrated that no substitutable goods were produced in Australia, thereby meeting the core criteria under section 269C of the Act. The instrument was published in the Gazette and no objections were received, allowing it to take effect from the date of application lodging, 16 December 2010. The policy objective is to ensure that such concessions are granted only when they do not disadvantage existing producers or impose liabilities on non-Commonwealth entities, while benefiting importers by potentially allowing them to apply for duty refunds.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), applies to individuals or entities seeking reduced customs duty rates on imported goods. Specifically, this legislation targets businesses that apply for tariff concessions for goods not produced domestically in the ordinary course of business, ensuring they meet the criteria outlined in sections 269C, 269B, and 269D of the Act. The TCO mechanism extends nationally, as it is administered by the Chief Executive Officer of Customs at a Commonwealth level. However, it excludes goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. Subordinate instruments may further define or refine the application of TCOs, thereby extending or restricting their scope. The process involves public consultation as mandated by section 269K(1) of the Act, although in this instance, no submissions were received. The commencement of a TCO is effective from the date of application lodging, and it does not retroactively disadvantage or impose liabilities on non-Commonwealth entities.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1054837 under the Customs Act 1901 (section 269P(3)) declare that certain ball bearings are goods to which item 50 of Schedule 4 to the Tariff applies, due to the Chief Executive Officer (CEO) of Customs being satisfied that no substitutable goods were produced in Australia on the date the application was lodged (section 269C). The instrument specifies that the ball bearings in question benefit from a free rate of duty, as opposed to the general rate of 5% (section 269P(3)).
The obligations imposed by this legislation primarily concern the CEO, who must ensure that any Tariff Concession Order (TCO) application meets the core criteria as outlined in section 269C. The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections to the TCO application, as per section 269K(1). SKF Australia Pty Ltd, as the applicant, must ensure that their application meets the criteria and provides all necessary information to the CEO.
The consequences for non-compliance with the Act's requirements are not explicitly detailed in the explanatory statement. However, any breach of the Act's provisions could potentially lead to legal consequences for the parties involved. This could include penalties for incorrect declarations or misrepresentation of facts in the application process. Given the context of the Customs Act, penalties for such breaches might involve fines or other civil or criminal sanctions as stipulated in the relevant sections of the Act. However, the specific penalties are not detailed in the explanatory statement provided.