EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1108058
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.
Toyota Motor Corporation Australia Limited applied for a TCO in respect of certain buses on 4 March 2011.
Instrument
TCO No 1108058 was made on 24 May 2011. It declares that those certain buses 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. 1108058 is taken to have come into force on 4 March 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, establishes a framework for the administration of customs duties and provides a mechanism for tariff concession orders (TCOs). The Act was introduced to address the need for flexible tariff arrangements that could respond to specific economic circumstances, ensuring that Australian industries remain competitive. The Tariff Concession Instrument No. 1108058, made by the Chief Executive Officer of Customs on 24 May 2011, provides a specific instance of this mechanism being applied. In this case, Toyota Motor Corporation Australia Limited applied for a TCO for certain buses, resulting in a concession that lowered the duty on these goods from the general rate of 5% to free. The policy objective underlying this concession was to support the importation of these buses without imposing additional financial burdens, thereby aiding the automotive industry in Australia.
Scope and Application
The Customs Act 1901, as applied through Tariff Concession Instrument No. 1108058, pertains specifically to the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This instrument applies to entities such as Toyota Motor Corporation Australia Limited, which have applied for and been granted concessions on customs duties for certain imported goods, in this case, specific buses. The primary criterion for eligibility under section 269C of the Act is the absence of substitutable goods produced in Australia at the time of application. The instrument extends its application to the entire Commonwealth of Australia, aligning with the overarching provisions of the Customs Act. Importantly, the TCO does not affect the rights of any person other than the Commonwealth and does not impose any new liabilities. It solely provides for a reduction in customs duty for the specified goods, with the general rate of duty dropping from 5% to free, thereby benefiting importers by potentially allowing them to claim refunds for duties paid on imports since the TCO's effective date of 4 March 2011.
Key Provisions
The primary sections of the Customs Act 1901, relevant to the Tariff Concession Instrument No. 1108058, include sections 269C (definition of core criteria), 269D (definition of goods produced in Australia), 269E (definition of ordinary course of business), and 269F (provision for applying for a Tariff Concession Order). According to section 269F, a person may apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) concerning certain goods. If the CEO determines that the application is valid and meets the core criteria stipulated in section 269C, they are obligated to issue a TCO. This order specifies that the goods in question will be subject to a reduced rate of customs duty, as outlined in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes specific obligations on the CEO regarding the assessment and issuance of TCOs. For instance, once an application is accepted as valid, the CEO must publish a notice in the Gazette (subsection 269K(1)), inviting any interested parties to submit objections or reasons why the TCO should not be made. If no submissions are received, the CEO must proceed with the TCO issuance. Additionally, section 269S(1) mandates that a TCO is considered effective from the date the application is lodged. In the case of TCO No. 1108058, this means the order came into force on 4 March 2011.
Failing to comply with the requirements set out in the Customs Act 1901 may result in various consequences. For example, if a person submits an application for a TCO without meeting the core criteria, or if the CEO does not follow the prescribed procedures, there may be legal repercussions. However, the explanatory statement does not detail specific offences or penalties related to the issuance of TCOs. It is worth noting that while the TCO does not impose any new liabilities on individuals or entities, it does alter the customs duty rates applicable to the specified goods, potentially impacting the financial obligations of importers.
The Tariff Concession Instrument No. 1108058 specifically pertains to buses and reduces the customs duty rate from the general 5% to free, provided that the buses meet the criteria of the TCO. This reduction is beneficial to importers who can apply for a refund of duty on goods imported since the TCO came into effect. The instrument ensures that no existing rights or liabilities of non-Commonwealth entities are adversely affected by the issuance of the TCO, thereby maintaining a balance between the interests of the government and the affected parties.