EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1117973
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 of Australia Pty Ltd applied for a TCO in respect of certain dowel pins on 06 June 2011.
Instrument
TCO No 1117973 was made on 22 August 2011. It declares that those certain dowel pins 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. 1117973 is taken to have come into force on 06 June 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. 1117973 was enacted in 2011 as a response to an application by Caterpillar of Australia Pty Ltd for tariff concessions on certain dowel pins. The Customs Act 1901 provides a mechanism under which tariff concession orders can be made to lower customs duty rates for specific goods, and this instrument was created to address the specific needs of the applicant by granting a tariff concession on these particular goods. The instrument was made by the Chief Executive Officer of Customs in accordance with the legislative framework established by the Customs Act, which requires that no substitutable goods were produced in Australia at the time of the application. The instrument aims to provide tariff relief to the applicant, thereby potentially enhancing competitiveness and economic efficiency without disadvantaging other stakeholders, as no submissions were received against the application and the rights of existing parties were protected.
Scope and Application
The Tariff Concession Instrument No. 1117973, established under the Customs Act 1901, applies to goods that are subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs (CEO). The primary focus is on specific goods, such as certain dowel pins, which are subject to a TCO when no substitutable goods are produced in Australia in the ordinary course of business. The application of this legislation is significant for entities involved in the importation of these goods, as it alters the duty rate from the general rate of 5% to a concessional rate of free. This Act extends to the national level and its provisions apply across all states and territories within Australia. However, it specifically excludes any goods listed in section 269SJ of the Act, which are ineligible for a TCO. The TCO does not impose any liabilities or disadvantage any person except the Commonwealth and is effective from the date the application for the TCO was lodged, in this case, 06 June 2011. The rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 1117973 under the Customs Act 1901 (section 269F) allow the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCO) for certain goods, which are then subject to a lower rate of customs duty. The application for a TCO (section 269C) must meet the core criteria, which includes the condition that no substitutable goods were produced in Australia at the time of the application (section 269SJ). Once the CEO is satisfied that the application meets these criteria, they must make a written order (section 269P(3)) declaring the goods eligible for tariff concessions. This specific instrument, TCO No. 1117973, applies to certain dowel pins, granting them a free rate of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on parties and entities governed by it are primarily concerned with the application and assessment process for TCOs. The CEO must publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any person who believes there are reasons why the TCO should not be made. The CEO must also ensure that the application does not pertain to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The CEO's decision-making process is further guided by the definitions provided in sections 269D and 269E of the Act, which detail what constitutes 'goods produced in Australia' and 'ordinary course of business', respectively.
Any breaches of the Act's provisions can lead to legal consequences. Although specific offences and penalties are not detailed in the explanatory statement, general provisions under the Customs Act 1901 suggest that violations could result in civil or criminal penalties, depending on the nature and severity of the breach. The maximum penalties for breaches can include fines and, in some cases, imprisonment. However, it is important to note that the explanatory statement does not specify the penalties for this particular TCO but refers to the general penalties that may apply under the overarching Customs Act.
The commencement of TCO No. 1117973 is effective from the date the application was lodged, 06 June 2011 (subsection 269S(1)). This means that the tariff concessions apply retroactively from that date, but the rights of persons, other than the Commonwealth, are not disadvantaged by the TCO. Importers of the eligible goods can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The TCO also ensures that no new liabilities are imposed on any person as a result of its enactment.