EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113893
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.
Bombardier applied for a TCO in respect of certain bogie tram on 02 May 2011.
Instrument
TCO No 1113893 was made on 18 July 2011. It declares that those certain bogie trams 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. 1113893 is taken to have come into force on 02 May 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, provides a framework for the administration of customs and excise duties, and includes provisions for Tariff Concession Orders (TCOs). The Act was introduced to address the need for flexibility in tariff rates to support certain economic activities and to encourage the production of goods within Australia. TCOs allow for a reduced rate of customs duty on specific goods, provided certain criteria are met. The policy objective is to promote competitive markets and potentially stimulate local production where substitutable goods are not produced domestically. On 18 July 2011, the Chief Executive Officer of Customs issued Tariff Concession Instrument No. 1113893, which grants a tariff concession on certain bogie trams, setting their duty rate to free, down from the general rate of 5%. This concession was made after it was determined that no substitutable goods were produced in Australia, and followed a valid application by Bombardier on 2 May 2011. The instrument came into force on the date of the application, and no submissions were received in opposition to the concession.
Scope and Application
The Tariff Concession Instrument No. 1113893 applies specifically to the goods in question, namely certain bogie trams, as identified by Bombardier in their application to the Chief Executive Officer of Customs under the Customs Act 1901. The Act authorises the CEO to grant Tariff Concession Orders (TCO) which, if met, allow for a lower rate of customs duty on specified goods. The legislation targets any person or entity seeking to import these goods and is applicable from the moment the TCO application is lodged, in this case, 2 May 2011. The instrument extends to the national level, as it involves the Commonwealth's customs duty regulations. The scope of the Act is restricted to goods that are not produced in Australia and do not have substitutable goods produced domestically, as outlined in sections 269C, 269D, and 269E of the Act. The TCO does not affect pre-existing rights or impose liabilities on any party except the Commonwealth, and notably, importers of the specified goods can apply for a refund of duty from the effective date of the TCO. Any subordinate instruments or regulations that might further refine or expand upon the application of this Act would be subject to the Customs Tariff Act 1995 and associated regulations.
Key Provisions
The primary operative sections of the Customs Act 1901 in relation to Tariff Concession Orders (TCOs) include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of specific goods. Section 269C requires that the application meets core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269B, 269D, and 269E. If the CEO determines that the application meets these criteria, they must issue a written TCO under section 269P(3), declaring the applicable tariff concession.
The Customs Act 1901 imposes several obligations on parties involved in the TCO process. The CEO is required to consider the application against the core criteria and to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, as per subsection 269K(1). The applicant must ensure that their application meets the statutory requirements, including the absence of substitutable goods produced in Australia. The CEO must make a decision based on the evidence provided and, if applicable, issue the TCO. Importers who benefit from the TCO can apply for a refund of duty paid on goods imported since the TCO came into effect, as per paragraph 126(1)(r) of the Regulations.
Under the Customs Act 1901, there are no specific offences, penalties, or civil/criminal consequences outlined for breaches of the TCO provisions. However, any misuse or fraudulent application for a TCO could potentially lead to actions under broader customs legislation, such as fines or imprisonment for false declarations or fraudulent activities. The specific penalties for such actions would depend on the nature and severity of the breach, but they could include substantial fines and/or imprisonment terms as provided under general customs laws. The absence of substitutable goods being produced in Australia is a key criterion, and any misrepresentation in this regard could lead to revocation of the TCO and potential penalties.