EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1123205
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 applied for a TCO in respect of certain tracklaying machine parts on 13 July 2011.
Instrument
TCO No 1123205 was made on 26 September 2011. It declares that those certain tracklaying machine 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. 1123205 is taken to have come into force on 13 July 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 Parliament of Australia to provide for the collection of duties of customs and excise and to regulate the importation and exportation of goods. The Act established a framework for administering customs and excise duties, including the process for granting tariff concessions. The Tariff Concession Instrument No. 1123205, made under the Customs Act 1901, was introduced to address the specific issue of tariff concessions for certain goods not produced in Australia. This instrument was developed in response to an application by Caterpillar of Australia for a tariff concession on certain tracklaying machine parts, aiming to reduce the customs duty on these imported goods by providing a concession that recognises the absence of substitutable goods produced domestically. The policy objective behind this concession is to support industries that rely on imported components, thereby promoting economic efficiency and competitiveness without disadvantaging existing rights or imposing new liabilities on affected parties.
Scope and Application
The Tariff Concession Instrument No. 1123205, issued under the Customs Act 1901, pertains to the application and administration of Tariff Concession Orders (TCOs) for specific goods, in this case, certain tracklaying machine parts, as applied by Caterpillar of Australia. The Act applies to any person or entity seeking a reduction in customs duty on goods through the submission of a TCO application to the Chief Executive Officer of Customs (CEO). The geographic reach of this Act is national, as it is governed by the Commonwealth of Australia. The Act provides a mechanism for the CEO to determine whether a TCO application meets core criteria, which include the condition that no substitutable goods were produced in Australia on the day the application was lodged. Any exclusions under this Act are specified in section 269SJ of the Customs Act 1901, which outlines goods that cannot be subject to a TCO. The application of the Act can be extended or restricted through subordinate instruments such as regulations, which are not detailed in this specific Instrument but form part of the broader legislative framework.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1123205 (sections 269C, 269F, 269P, 269SJ, and 269K) set out the requirements for applying for and making a Tariff Concession Order (TCO). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which outlines goods that cannot be subject to a TCO. Section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged, as per section 269D, and if the production was in the ordinary course of business as defined in section 269E. If the CEO is satisfied that the application meets these criteria, section 269P(3) requires the CEO to make a written TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods. Section 269K(1) mandates that as soon as practicable after accepting a TCO application as valid, the CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made.
The Act imposes specific obligations and requirements on the parties involved. An applicant seeking a TCO must ensure their application does not pertain to goods listed in section 269SJ. The CEO, upon receiving a valid application that meets the core criteria, is obligated to make a written TCO. Furthermore, the CEO must publish a notice in the Gazette, inviting any person to submit reasons why the TCO should not be made. The CEO is also required to consider any submissions received in response to the published notice. In this case, the CEO did not receive any submissions, which may have expedited the process.
Breaching the provisions of the Customs Act 1901 can result in various offences, penalties, and consequences. While the explanatory statement does not detail specific penalties for breaches related to TCOs, breaches of the Customs Act generally can lead to civil or criminal penalties. For instance, section 257 of the Customs Act provides for civil penalties, including fines and compensation, for offences such as making false statements or evading duty. Criminal penalties can include imprisonment, fines, or both, depending on the severity of the offence. The maximum penalties would be determined by the specific breach and the relevant sections of the Customs Act and other applicable legislation.