EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1110526
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.
Bucyrus Mining Australia Pty Ltd applied for a TCO in respect of certain excavator parts on 28 March 2011.
Instrument
TCO No 1110526 was made on 15 June 2011. It declares that those certain excavator 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. 1110526 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 Commonwealth Parliament, establishes a framework for the regulation of customs and excise in Australia, including the mechanism for Tariff Concession Orders (TCOs). The Act was introduced to provide flexibility in tariff regulation by allowing for reduced customs duty on certain goods, thereby promoting trade and economic efficiency. The explanatory statement for Tariff Concession Instrument No. 1110526 clarifies that this instrument was created to address the specific application by Bucyrus Mining Australia Pty Ltd for tariff concessions on certain excavator parts. This was achieved by determining that no substitutable goods were produced in Australia, thus meeting the core criteria under section 269C of the Act. The policy objective is to support Australian industries by ensuring that duty is only waived when there is no domestic production of equivalent goods, thereby preventing potential disadvantages to local producers.
Scope and Application
The Tariff Concession Instrument No. 1110526, made under the Customs Act 1901, applies to Bucyrus Mining Australia Pty Ltd's application for tariff concessions on certain excavator parts. This instrument is concerned with goods that are subject to a Tariff Concession Order (TCO), which allows for a reduced rate of customs duty. The Act applies to any entity or individual who applies for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act, which lists items ineligible for TCOs. The geographic reach of this legislation is national, as it operates under the Commonwealth's authority, but its primary effect is on the importation of goods into Australia. The instrument ensures that the application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. The TCO does not affect the rights of any person except the Commonwealth and does not impose any liabilities on any person for actions taken before the TCO's registration.
The application process requires the Chief Executive Officer of Customs to make a written order if the application meets the core criteria, as outlined in section 269C of the Act. In this case, the CEO was satisfied that no substitutable goods were produced in Australia and thus made TCO No. 1110526, which came into force on 28 March 2011. The TCO specifies that the certain excavator parts are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the duty rate changing from 5% to free. The TCO also mandates the publication of the application in the Gazette to invite submissions, although none were received in this instance.
Key Provisions
The main operative sections of the Customs Act 1901 in this context include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ). These sections collectively establish the framework for applying for and receiving a Tariff Concession Order (TCO). Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO. Section 269C outlines the core criteria that the application must meet, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must issue a TCO. The TCO, in this case, No. 1110526, declares that certain excavator parts are eligible for a tariff concession, reducing the duty rate from the general 5% to free.
The Act imposes specific obligations on both the applicant and the CEO. The applicant must ensure their application is valid and meets the criteria outlined in section 269C. This includes demonstrating that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO is required to review the application, consider any submissions received, and make a decision based on the criteria in section 269C. If the CEO is satisfied that the application meets the criteria, they must issue a written TCO (section 269P(3)). Furthermore, the CEO must publish a notice in the Gazette inviting any person who considers the TCO should not be made to lodge a submission (subsection 269K(1)). In this case, the CEO did not receive any submissions in response to the published notice.
The Act does not explicitly outline specific offences, penalties, or consequences for breach in the context of TCOs. However, it does establish that 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 (subsection 269S(1)). Therefore, if the CEO issues a TCO without meeting the criteria or without properly considering all submissions, it could potentially lead to legal challenges or administrative reviews. The rights of importers will be beneficially affected, and they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).