EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1055950
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.
Scenic World Blue Mountains applied for a TCO in respect of certain funicular railway parts on 23 December 2010.
Instrument
TCO No 1055950 was made on 21 March 2011. It declares that those certain funicular railway 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. 1055950 is taken to have come into force on 23 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, enacted by the Australian Parliament, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs) under Part XVA. These orders allow for the application of reduced customs duty rates on specific goods, provided certain criteria are met. The problem or gap this legislative scheme addresses is the need for tariff relief for imported goods where no suitable Australian-made alternatives exist. The policy objective is to promote trade and economic efficiency by facilitating the import of goods that cannot be produced domestically. Scenic World Blue Mountains sought a TCO for certain funicular railway parts, which was granted on 21 March 2011, effective from 23 December 2010, following a determination by the Chief Executive Officer of Customs that no substitutable goods were produced in Australia. The TCO provides for these parts to be subject to a 5% duty rate, down from the general rate, and ensures that the rights of importers are beneficially affected while not imposing new liabilities on any person.
Scope and Application
The Tariff Concession Instrument No. 1055950, issued under Part XVA of the Customs Act 1901, applies to specific funicular railway parts sought by Scenic World Blue Mountains. This instrument pertains to the application of a Tariff Concession Order (TCO) for these goods, facilitating a reduction in customs duty from the general rate to free. The scope of the Act is limited to the goods specified in the application and does not extend to any goods listed in section 269SJ, which cannot be subject to a TCO. The Act applies nationally as it is an instrument of the Commonwealth of Australia. The application process mandates that the CEO of Customs must ensure that no substitutable goods are produced in Australia at the time of the application, adhering to the definitions provided in the Act. The TCO was published in the Gazette to allow for any objections, though none were received. The TCO's commencement date aligns with the date of the application, and it does not retroactively affect the rights or liabilities of any party other than the Commonwealth, ensuring that only future transactions are subject to the reduced duty rate.
Key Provisions
The main operative sections of the Customs Act 1901, as implemented in Tariff Concession Instrument No. 1055950, include section 269C, which outlines the core criteria for making a Tariff Concession Order (TCO), and section 269P, which stipulates that if these criteria are met, the Chief Executive Officer of Customs (CEO) must make a TCO (subsection 269P(3)). This instrument specifically addresses the concession for certain funicular railway parts, as applied for by Scenic World Blue Mountains on 23 December 2010. Section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions on the TCO application, although no submissions were received in this case.
Under the Customs Act, the CEO has the authority to grant a TCO if the applicant meets the core criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business at the time of application (section 269C). The CEO must also verify that the goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. For Scenic World Blue Mountains, the CEO was satisfied that the funicular railway parts met these criteria, resulting in a TCO being issued on 21 March 2011.
The obligations imposed by the Act on parties and entities it governs include the requirement for applicants to ensure their goods meet the specified criteria for a TCO, such as the absence of substitutable goods produced in Australia. The CEO must also publish a notice in the Gazette inviting submissions on the application, ensuring transparency and providing an opportunity for any interested parties to voice concerns. Additionally, the Act requires the CEO to consider any submissions received before making a decision on the TCO.
In terms of consequences for breach, the Customs Act does not explicitly outline offences or penalties for non-compliance with the TCO provisions in the context of this specific instrument. However, general provisions in the Act provide for enforcement actions, including fines and imprisonment, for broader breaches of customs laws. For the specific TCO, Scenic World Blue Mountains must ensure compliance with the conditions of the concession, and failure to do so could result in the revocation of the concession or other administrative actions by the CEO.