EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1110479
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.
General Electric International Inc applied for a TCO in respect of certain synchronous AC motors on 28 March 2011.
Instrument
TCO No 1110479 was made on 15 June 2011. It declares that those certain synchronous AC motors 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. 1110479 is taken to have come into force on 28 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 Australian Parliament, establishes a framework for the regulation of customs and excise duties. The Act allows for the creation of Tariff Concession Orders (TCOs) which provide for lower customs duty rates on specified goods. The problem this legislation addresses is the need for a streamlined process to provide tariff concessions for goods that are not produced in Australia and for which there are no substitutable domestically produced goods. The Tariff Concession Instrument No. 1110479, made under the authority of the Customs Act 1901, was introduced to grant a tariff concession to General Electric International Inc for certain synchronous AC motors, recognising the absence of substitutable goods produced in Australia. This instrument aims to facilitate trade by reducing the customs duty on these specific goods, thereby enhancing the competitiveness of imported products in the Australian market.
Scope and Application
The Tariff Concession Instrument No. 1110479, made under Part XVA of the Customs Act 1901, pertains to the application of tariff concessions for specific goods, namely certain synchronous AC motors, which now enjoy a zero rate of customs duty as opposed to the general rate of 5%. This legislation applies to entities or individuals importing these synchronous AC motors into Australia, thus directly impacting the relevant industry sectors that rely on these motors. The scope of the Act encompasses the assessment and application of tariff concessions, ensuring that such concessions are granted only when certain conditions are met, specifically when no substitutable goods are produced in Australia in the ordinary course of business. The Act operates at a national level, aligning with the broader framework established under the Customs Act 1901 and the Customs Tariff Act 1995. The exclusions include goods specified in section 269SJ of the Customs Act 1901, which cannot be subject to a tariff concession order. The application of this legislation can be extended or restricted through subordinate instruments, as outlined in the Customs Tariff Act 1995.
Key Provisions
The main operative sections of this legislation, specifically TCO No. 1110479, revolve around the application and granting of a Tariff Concession Order (TCO) for certain synchronous AC motors. Section 269F of the Customs Act 1901 allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ, and that the application meets the core criteria outlined in section 269C, the CEO must make a written order (section 269P). This order declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which sets the rate of duty for these goods. In this instance, the TCO specifies that the synchronous AC motors are subject to item 50 of Schedule 4, resulting in a duty rate of free, as opposed to the general rate of 5%.
The Act imposes certain obligations and requirements on both the CEO and applicants for a TCO. For the CEO, it is mandatory to decide whether an application meets the core criteria by verifying that no substitutable goods were produced in Australia in the ordinary course of business, as outlined in sections 269B and 269C. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties, as required by subsection 269K(1). In the case of TCO No. 1110479, the CEO did not receive any submissions. For applicants, they must ensure their application complies with the provisions of the Customs Act 1901 and provide sufficient evidence to satisfy the CEO that the core criteria are met. In this case, General Electric International Inc successfully applied for a TCO by providing adequate evidence that no substitutable goods were produced in Australia.
Breach of the conditions set out in the Customs Act 1901 may result in various penalties and consequences. While the explanatory statement does not explicitly state penalties for non-compliance, the Act generally allows for enforcement actions, including fines and potential criminal charges, for violations of its provisions. The maximum penalties for breaches of customs laws can vary significantly depending on the nature and severity of the offence, but they can include substantial fines and imprisonment terms. It is essential for parties governed by the Act to ensure compliance to avoid any legal repercussions.