EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1126094
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.
Clark Equipment applied for a TCO in respect of certain air compressors on 03 August 2011.
Instrument
TCO No 1126094 was made on 02 November 2011. It declares that those certain air compressors 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. 1126094 is taken to have come into force on 03 August 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 to manage and regulate the customs and excise duties in Australia, ensuring the collection of revenue and the enforcement of trade laws. The Act, administered by the Australian Parliament, provides a framework for tariff concessions through Tariff Concession Orders (TCOs) which can be applied for by individuals or entities to reduce the customs duty on specific goods. The problem this legislation addresses is the potential for unfair trade practices and the need to provide relief to Australian importers by allowing them to access goods at a lower duty rate when no substitutable goods are produced in Australia. The policy objective behind the creation of TCOs, as outlined in the Act, is to promote fair trade and to support the economic viability of Australian businesses by reducing the cost of imported goods that do not have local alternatives.
Scope and Application
The Customs Act 1901 applies to all persons and entities involved in the importation of goods into Australia, including importers, exporters, customs brokers, and other relevant stakeholders. The Act provides a framework for the regulation of customs duties, tariffs, and other related matters, including the creation of Tariff Concession Orders (TCOs) under Part XVA of the Act. A TCO can be applied for by any person in respect of specific goods, with the Chief Executive Officer of Customs (CEO) having the authority to grant such concessions if certain criteria are met. The geographic reach of the Act is national, applying across all states and territories of Australia. However, the Act does not apply to goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. The application process for a TCO involves an assessment by the CEO to determine if the goods in question are substitutable by Australian-produced goods and if the application meets the core criteria outlined in the Act. If a TCO is granted, it applies to the goods from the date the application was lodged, and it does not impose any liabilities on any person other than the Commonwealth. The Act also allows for subordinate instruments to extend or restrict its application, as seen in the creation of TCOs.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1126094, under the Customs Act 1901, include section 269F, which allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the application meets the core criteria specified in section 269C, and there are no substitutable goods produced in Australia, as defined by sections 269D and 269E, the CEO is required to make a written order, or TCO, for the goods in question (section 269P(3)). This instrument specifically concerns certain air compressors and has declared them to be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free instead of the general rate of 5%.
The Customs Act 1901 imposes several obligations on the parties involved. The CEO must ensure that an application for a TCO is valid and not in respect of goods specified in section 269SJ. If the application meets the core criteria, the CEO is mandated to make a written order. Additionally, the CEO is required to publish a notice in the Gazette, inviting any person who believes the TCO should not be made to submit their reasons (subsection 269K(1)). Importers of the affected goods can apply for a refund of duty on goods imported since the day the TCO is deemed to have come into force (paragraph 126(1)(r) of the Regulations). The Act also ensures that the TCO does not affect the rights of a person, other than the Commonwealth, to disadvantage that person or impose liabilities in respect of actions taken before the date of registration.
Failure to comply with the obligations and requirements set forth in the Customs Act 1901 can lead to various consequences. If the CEO fails to properly evaluate an application for a TCO or improperly grants a TCO, they may be subject to legal scrutiny and potential penalties. Importers or other entities who violate the terms of the TCO or fail to apply for a duty refund as permitted by the Regulations may also face civil or criminal consequences. While specific penalties are not detailed in the explanatory statement, breaches of customs legislation can typically result in fines, imprisonment, or both, depending on the severity of the offence.