EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114533
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.
Caterpillar Australia applied for a TCO in respect of certain accumulators on 10 May 2011.
Instrument
TCO No 1114533 was made on 01 August 2011. It declares that those certain accumulators 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. 1114533 is taken to have come into force on 10 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 was enacted by the Australian Parliament to regulate the importation and exportation of goods and provide for the collection of customs duty and other charges. The Act establishes a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs to provide reduced rates of customs duty on specified goods. This legislative instrument, F2011L02308, addresses the issue of facilitating trade by reducing the customs duty on certain goods that are deemed not substitutable by domestic production, thus encouraging imports and potentially lowering costs for consumers. The policy objective is to ensure that the application of tariff concessions is consistent and fair, while also supporting economic growth by making imported goods more competitive. The instrument was introduced to provide a mechanism for the CEO to assess applications and make orders based on the criteria set out in the Customs Act, ensuring that the application of tariff concessions does not disadvantage existing domestic industries.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) which can apply a lower rate of customs duty to specified goods. The Act applies to any person or entity that seeks to import goods into Australia and is seeking tariff concessions under the scheme established by the Act. The geographic reach of the Act is national, as it pertains to the Commonwealth of Australia. The application of the Act is limited by exclusions set out in section 269SJ, which specifies goods that cannot be subject to a TCO. Any application for a TCO that meets the criteria under sections 269C and 269P will be considered by the Chief Executive Officer of Customs (CEO) for approval. The CEO must ensure that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If the CEO is satisfied with the application, they must make a written TCO under section 269P(3), which will then apply the prescribed rate of duty as specified in Schedule 4 to the Customs Tariff Act 1995. The TCO in question, Instrument TCO No 1114533, was made for certain accumulators on 1 August 2011, and it is effective from 10 May 2011, the date the application was lodged. This TCO does not affect any pre-existing rights or impose new liabilities on persons other than the Commonwealth.
Key Provisions
The main operative sections of the Customs Act 1901, as referenced in the Explanatory Statement for Tariff Concession Instrument No. 1114533, include sections 269F, 269C, 269B, 269D, 269E, 269P, and 269K. Section 269F allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the application is deemed valid and meets the core criteria outlined in section 269C, the CEO must issue a TCO under section 269P, effectively reducing the customs duty on the specified goods. Section 269B defines the terms necessary to evaluate whether the goods are substitutable and produced in Australia in the ordinary course of business. Section 269K mandates the CEO to publish a notice in the Gazette inviting public submissions on the proposed TCO. The TCO, once issued, provides tariff concessions on the specified goods, with the TCO in this case applying to certain accumulators, reducing the duty rate from 5% to free.
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for the CEO to evaluate TCO applications against the core criteria specified in section 269C. The CEO must also ensure that no substitutable goods are produced in Australia before issuing a TCO. Moreover, the CEO must publish a notice in the Gazette inviting public submissions under section 269K. Caterpillar Australia, as the applicant, must submit a valid application that meets the criteria for tariff concessions. Any person who believes a TCO should not be made has the right to lodge a submission with the CEO. Importers, once the TCO is issued, can apply for a refund of duty on goods imported since the TCO's effective date under the Customs Regulations.
Failure to comply with the provisions of the Customs Act 1901, particularly concerning the issuance or application of a TCO, could lead to civil or criminal consequences. However, the Explanatory Statement does not detail specific offences or penalties related to TCOs. The Act's overarching framework suggests that breaches could result in legal actions to enforce compliance or penalties as outlined in other parts of the Customs Act or related regulations. The specifics of such penalties would depend on the nature and severity of the breach, but could potentially involve fines or other enforcement measures to ensure adherence to the Act's provisions.