EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1100575
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.
Vanguard Wind Pty Ltd applied for a TCO in respect of certain mobile cranes on 05 January 2011.
Instrument
TCO No 1100575 was made on 04 April 2011. It declares that those certain mobile cranes 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. 1100575 is taken to have come into force on 05 January 2011.
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 Parliament of Australia, established a framework for the imposition of customs duties on imported goods. It allows for the creation of Tariff Concession Orders (TCOs) to provide lower customs duty rates for certain goods under specific conditions. The problem or gap this legislation addresses is the need for a flexible mechanism to adjust customs duties to support economic interests and international trade obligations, particularly in cases where substitutable goods are not produced in Australia. This explanatory statement details Tariff Concession Instrument No. 1100575, which was made on 04 April 2011. This instrument was created to grant tariff concessions to Vanguard Wind Pty Ltd for certain mobile cranes, following their application for a TCO on 05 January 2011. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, meeting the core criteria set out in the Customs Act. Consequently, the mobile cranes in question now attract a free rate of duty under the Customs Tariff Act 1995, which contrasts with the general rate of 5%. This legislative action ensures that the rights of importers are positively impacted and that no existing liabilities or rights are adversely affected by the concession.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which apply lower rates of customs duty to certain goods. This legislation applies to any person who can demonstrate that the goods they are importing are not being produced in Australia and that there are no substitutable goods available domestically. The application process requires the CEO to assess whether the goods meet the core criteria set out in section 269C of the Act, which mandates that no substitutable goods must be produced in Australia in the ordinary course of business. The geographic and jurisdictional reach of this Act is national, as it is an Australian Commonwealth legislation. There are specific exclusions, such as goods listed in section 269SJ, which cannot be subject to a TCO. The application of this Act can be further refined through subordinate instruments, as indicated by the creation of specific TCOs such as TCO No. 1100575, which was issued in relation to certain mobile cranes, setting their duty rate to free under item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCOs do not affect any existing rights or impose liabilities on persons for actions taken prior to the order's registration.
Key Provisions
The Customs Act 1901 (section 269F) provides that a person may apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods, with the possibility of a lower rate of customs duty. If the CEO is satisfied that the application is valid and does not pertain to goods that cannot be subject to a TCO (section 269SJ), they must determine if the application meets the core criteria set out in the Act. Specifically, section 269C stipulates that the application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The meanings of key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are defined in sections 269D, 269E, and 269B respectively.
In the case of Vanguard Wind Pty Ltd's application for a TCO concerning certain mobile cranes, the CEO was satisfied that the application met the core criteria as no substitutable goods were produced in Australia. Consequently, a written order (TCO) was made under subsection 269P(3), declaring that the mobile cranes in question are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies. This resulted in a reduction of the duty rate from the general rate of 5% to free duty for these goods.
The Act imposes certain obligations on the parties involved. For instance, under subsection 269K(1), the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid. This notice must include an invitation for any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. Additionally, the Act stipulates that the TCO does not affect the rights of any 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.
Any breaches of the provisions set out in the Customs Act 1901 may result in various civil or criminal consequences. However, the Explanatory Statement does not provide specific details regarding penalties or maximum penalties for breaches of the Act in this context. It is important to note that failure to comply with the requirements of the Act or any resultant TCO could potentially lead to legal action, including fines or other sanctions as prescribed by law.