EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112994
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.
Clark Equipment applied for a TCO in respect of certain air compressors on 19 April 2011.
Instrument
TCO No 1112994 was made on 11 July 2011. It declares that those certain air compressors 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. 1112994 is taken to have come into force on 19 April 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 imposition and regulation of customs duties, including the ability to grant tariff concession orders (TCOs) to lower duty rates for certain goods. This legislation aims to address the problem of ensuring fair and competitive access to imported goods, particularly in cases where no Australian-made alternatives exist. The Tariff Concession Instrument No. 1112994, made under the authority of the Act, was introduced to provide tariff concessions for certain air compressors, thereby reducing the customs duty on these goods from the general rate of 5% to free. This was achieved after the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, meeting the core criteria for a TCO. The policy objective here is to ensure that businesses can access necessary imported goods at reduced costs, thereby supporting competitive markets and potentially lowering costs for consumers.
Scope and Application
The Tariff Concession Instrument No. 1112994 under the Customs Act 1901 applies specifically to the import of certain air compressors, granting them tariff concessions as stipulated in item 50 of Schedule 4 to the Customs Tariff Act 1995. This concession was granted to Clark Equipment, effective from 19 April 2011, the date the application was lodged. The Act allows for the Chief Executive Officer of Customs to issue a Tariff Concession Order (TCO) if certain criteria are met, such as the absence of substitutable goods produced in Australia. The TCO imposes no liabilities on any person and does not affect existing rights or impose disadvantages or liabilities for actions taken before the TCO's registration. Additionally, the TCO provides for the potential refund of duties paid on the specified goods imported since the TCO's effective date, benefiting importers. The geographic reach of this legislation is national, as it pertains to imports across Australia, and the application is confined to the specified goods without broader exemptions or exclusions. The Act allows for further regulation and specification through subordinate instruments, which may further define the scope and conditions of such tariff concessions.
Key Provisions
The main operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), include section 269F, which allows for the application to the Chief Executive Officer (CEO) of Customs for a TCO, and section 269C, which sets out the core criteria that must be met for the application to be considered valid (sections 269F and 269C). Under section 269C, the application must satisfy the condition that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This is further clarified in sections 269D, 269E, and 269P(3), which define "goods produced in Australia," "ordinary course of business," and the implications for substitutable goods, respectively. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods specified in the TCO application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, as specified in the order (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. Firstly, any person wishing to apply for a TCO must ensure that their application meets the core criteria outlined in section 269C, particularly ensuring that no substitutable goods were produced in Australia on the date of application. The CEO, on receiving a valid application, must publish a notice in the Gazette inviting submissions from interested parties and consider any submissions received (subsection 269K(1)). If no submissions are received, the CEO must proceed to make the TCO if the application meets the criteria. The TCO itself, once made, declares the specific goods to which a prescribed tariff item applies, thereby altering the customs duty rate for those goods.
The Act includes provisions for potential breaches and consequences, although specific offences and penalties are not detailed in the explanatory statement. Generally, under the Customs Act 1901, there are civil and criminal penalties for non-compliance with the Act's provisions, including the submission of false information or the misuse of TCOs. These penalties can include fines and imprisonment, depending on the severity of the breach. The explanatory statement does not provide specific maximum penalties but indicates that the TCO does not impose any new liabilities on persons other than the Commonwealth and does not affect rights as at the date of registration.
In summary, the key provisions of the Customs Act 1901 relevant to TCOs require applicants to ensure that their applications meet specific criteria, mandate the CEO to process and publish applications, and outline the effective date of the TCO. The obligations include thorough application submissions and public notice, while breaches can lead to civil or criminal penalties as prescribed by the Act.