EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1118045
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 pumps on 06 June 2011.
Instrument
TCO No 1118045 was made on 22 August 2011. It declares that those certain pumps 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. 1118045 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 Customs Act 1901, enacted by the Australian Parliament, provides a framework for the administration of customs and excise, including provisions for Tariff Concession Orders (TCOs) under Part XVA. The Tariff Concession Instrument No. 1118045 was introduced to address the specific needs of certain goods, such as pumps, which were subject to a TCO application by Caterpillar of Australia Pty Ltd. The problem it aimed to solve was the potential economic disadvantage to Australian businesses if certain imported goods were subject to higher customs duties, particularly when no locally produced substitutable goods existed. By issuing this TCO, the Chief Executive Officer of Customs granted tariff concessions to these specific pumps, setting their customs duty rate at free, thereby encouraging fair competition and potentially benefiting importers by allowing them to apply for duty refunds for imports made since the TCO's effective date of 6 June 2011.
Scope and Application
The Tariff Concession Instrument No. 1118045 pertains to the application of Part XVA of the Customs Act 1901, which facilitates the implementation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to goods that are the subject of a TCO application, specifically in cases where no substitutable goods are produced in Australia in the ordinary course of business. The primary focus is on ensuring that the application for a TCO meets the core criteria stipulated in the Act, particularly the requirement that no substitutable goods are produced domestically. The geographic reach of this Act is national, as it applies across Australia under the Commonwealth’s legislative authority. Notably, the Act excludes certain goods specified in section 269SJ from being subject to a TCO. The TCO itself, once made, has retroactive effect from the date the application was lodged, which in this instance was 06 June 2011, and it does not impose any liabilities on persons other than the Commonwealth, thus protecting the rights of importers who can apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Order (TCO) No. 1118045 under the Customs Act 1901 (section 269F) provides a lower rate of customs duty for certain pumps. Specifically, this TCO applies to goods that were the subject of an application by Caterpillar of Australia Pty Ltd on 06 June 2011, and the order was made on 22 August 2011 (section 269P(3)). This TCO declares that these certain pumps are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty-free rate for these goods, whereas the general rate of duty is 5% (section 269P(3)).
The obligations imposed by this legislation require the Chief Executive Officer of Customs (CEO) to evaluate whether an application for a TCO meets the core criteria. The application is assessed against the conditions outlined in sections 269C and 269SJ of the Customs Act 1901. For instance, the CEO must ascertain that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If satisfied, the CEO must make a written order declaring the goods to which the TCO applies (section 269P(3)). Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)).
The TCO, once registered, has a retroactive effect, coming into force on the day the application was lodged (subsection 269S(1)). Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken before the registration date (subsection 269S(3)). Importers of the specified goods will benefit from this TCO, as they can apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations may result in various penalties. While the explanatory statement does not explicitly detail the penalties, under the Customs Act, breaches of customs laws can lead to both civil and criminal consequences. Civil penalties can include fines, and in some cases, criminal penalties such as imprisonment, depending on the severity of the breach. The maximum penalties can vary significantly based on the specific breach and relevant sections of the Act. It is essential for parties governed by this Act to adhere to the stipulated obligations to avoid these consequences.