EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1116122
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 shovel parts on 23 May 2011.
Instrument
TCO No 1116122 was made on 08 August 2011. It declares that those certain excavator shovel 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. 1116122 is taken to have come into force on 23 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 Tariff Concession Instrument No. 1116122 was enacted under the Customs Act 1901, aiming to address the need for tariff concessions for specific goods by allowing the Chief Executive Officer of Customs to grant these concessions. The Customs Act 1901 provides a framework for the creation of Tariff Concession Orders (TCOs), which lower the rate of customs duty on particular goods if certain criteria are met. This instrument was introduced to facilitate the importation of certain excavator shovel parts by Bucyrus Mining Australia Pty Ltd, effective from 23 May 2011. The policy objective is to ensure that such tariff concessions do not disadvantage any person and provide a benefit to importers by allowing them to apply for duty refunds on goods imported since the commencement date of the TCO. The CEO was satisfied that the application met the core criteria and no substitutable goods were produced in Australia, leading to the issuance of the TCO on 08 August 2011, which sets the duty rate for these goods at free, down from the general rate of 5%.
Scope and Application
The Customs Act 1901 applies to any person or entity seeking a Tariff Concession Order (TCO) for goods entering Australia. Specifically, the Act allows for the Chief Executive Officer of Customs to grant a TCO which provides for a lower rate of customs duty on certain goods if no substitutable goods are produced in Australia in the ordinary course of business. This provision is particularly relevant to importers and manufacturers who may seek to reduce their customs duty obligations. The geographic reach of the Act is national, applying to all jurisdictions within Australia. However, certain goods specified in section 269SJ of the Act are ineligible for a TCO. The application process for a TCO requires the CEO to assess whether the applicant's goods meet the core criteria outlined in the Act, and the CEO may be subject to submissions from interested parties. The commencement of a TCO is effective from the date the application is lodged. The Act does not disadvantage any person other than the Commonwealth nor impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration. The application of the Act may be further defined or extended through subordinate instruments.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269B, 269D, 269E, 269F, 269P(3) and 269K(1) of the Customs Act 1901. These sections collectively establish the framework for the creation and implementation of Tariff Concession Orders (TCOs). Section 269F allows an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application meets the core criteria set out in section 269C, the CEO must make a written order, which is the TCO, as described in section 269P(3). The core criteria require that no substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269B and 269D. Section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions regarding the TCO application.
The Act imposes several obligations on the parties involved. The CEO is required to ensure that any application for a TCO complies with the core criteria outlined in section 269C. If the CEO is satisfied that the application meets these criteria, they must proceed to make the TCO as stipulated in section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who may have concerns regarding the TCO application. These obligations are essential to maintain the integrity of the TCO process and to ensure that the concessions are granted fairly and in accordance with the Act.
There are no specific offences or penalties outlined in the explanatory statement for breaches of the provisions related to TCOs. However, the Act generally provides for a range of civil and criminal penalties for breaches of customs laws, which could include fines or imprisonment. For example, under section 255 of the Customs Act 1901, a person who knowingly makes a false or misleading statement in a customs document can be fined up to 10,000 penalty units or imprisoned for up to five years, or both. The penalties for non-compliance with the Customs Act can be severe, and it is crucial for all parties involved to adhere to the requirements set out in the Act to avoid any potential legal consequences.