EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1055957
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.
Haulmax Pty Ltd applied for a TCO in respect of certain off highway rear dump truck engines on 23 December 2010.
Instrument
TCO No 1055957 was made on 21 March 2011. It declares that those certain off highway rear dump truck engines 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. 1055957 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 Tariff Concession Instrument No. 1055957 was enacted under the Customs Act 1901 with the intention of addressing the issue of applying tariff concessions to specific goods that are not produced domestically. This legislation was introduced to provide relief to businesses and importers by reducing the customs duty on certain goods, thereby making them more affordable and potentially increasing their competitiveness in the market. The instrument was created in response to an application by Haulmax Pty Ltd for tariff concessions on off-highway rear dump truck engines, which were deemed not to have substitutable goods produced in Australia at the time of application. This initiative was overseen by the Chief Executive Officer of Customs, who evaluated the application against the criteria outlined in the Customs Act, specifically ensuring that the goods in question were not listed in the non-eligible category and that no suitable domestic alternatives were being produced. The policy objective is to facilitate the import of goods that are essential for the economy or consumer market, provided there is no domestic production of equivalent goods, thereby aiding in the economic efficiency and growth of the nation.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at applying lower rates of customs duty on specified goods. This mechanism applies to any person or entity that wishes to import goods that qualify for such tariff concessions, provided that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The scope of the Act is Commonwealth-wide, impacting all importers across Australia. The application of a TCO hinges on the core criteria set out in sections 269C and 269S, which require that no substitutable goods are produced in Australia at the time the application is lodged. This ensures that the concessions do not undermine domestic production. The application process mandates that the CEO publish a notice in the Gazette inviting submissions, although in the case of TCO No 1055957, no submissions were received. The commencement of a TCO is effective from the date the application is lodged, ensuring timely application of the reduced duty rates. Notably, the TCO does not retroactively affect the rights of any person, safeguarding importers who may benefit from duty refunds for imports made since the effective date of the concession.
Key Provisions
The main operative sections of this legislation, particularly section 269F, establish the procedure for applying for a Tariff Concession Order (TCO) under the Customs Act 1901. If a person (section 269F) applies to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, the CEO must decide whether the application meets the core criteria, which are detailed in section 269C. This involves assessing whether the goods are not substitutable by goods produced in Australia, a term defined in section 269D. If the CEO is satisfied that the application meets the criteria, they must make a written order declaring that the goods are subject to a prescribed rate of customs duty specified in the order, as per section 269P(3).
The Act imposes certain obligations on the parties involved. The CEO of Customs must, upon receiving a TCO application, determine if it meets the core criteria by assessing whether no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If the criteria are met, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties and then make a written order as a TCO (sections 269K(1) and 269P(3)). The applicant, in this case Haulmax Pty Ltd, must provide sufficient information to support their application for the TCO, ensuring it complies with the criteria outlined in the Act.
Failure to comply with the provisions of the Act can lead to civil and criminal consequences. Although the explanatory statement does not detail specific offences or penalties for breaches, it is implied that non-compliance with the requirements for applying for and obtaining a TCO could result in legal action. Typically, under the Customs Act 1901, breaches can attract fines and, in severe cases, imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as any relevant case law or regulations that may apply. The legislation ensures that the rights of importers are protected, and that any liabilities imposed by the TCO do not affect actions taken prior to the TCO's effective date.