EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127602
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.
CMV Truck Sales and Service applied for a TCO in respect of certain motor vehicle parts on 15 August 2011.
Instrument
TCO No 1127602 was made on 07 November 2011. It declares that those certain motor vehicle 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. 1127602 is taken to have come into force on 15 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, enacted by the Australian Parliament, outlines a framework for tariff concession orders (TCO) through which the Chief Executive Officer of Customs can lower the customs duty on specific goods. The problem or gap this legislation addresses is the facilitation of trade by reducing the duty burden on imported goods that do not have substitutable domestic production. The policy objective, as stated in the Act, is to ensure that a TCO application meets the core criteria, such as the absence of substitutable goods produced in Australia, before granting tariff concessions. CMV Truck Sales and Service applied for a TCO concerning certain motor vehicle parts on 15 August 2011, and after meeting the core criteria, the CEO issued TCO No 1127602 on 7 November 2011, reducing the duty on these parts from 5% to free. The TCO was published in the Gazette with an invitation for objections, none of which were received, and it came into force on the date of application, 15 August 2011, without disadvantaging any existing rights or imposing new liabilities.
Scope and Application
The Customs Act 1901, specifically through Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that provide for lower rates of customs duty on specified goods. These orders apply to goods for which an application is made and subsequently approved by the CEO, provided they meet the criteria outlined in the Act. The application process requires that the goods in question are not those specified in section 269SJ, which excludes certain items from being subject to a TCO. A core criterion for approval is that no substitutable goods are produced in Australia on the day the application is lodged. Once a TCO is issued, it provides tariff relief for the specified goods, and the concession applies retroactively to the date the application was lodged, without affecting any existing rights or imposing new liabilities. The scope of the Act extends to all relevant goods and entities within the Australian jurisdiction, impacting the import duties and potentially entitling importers to duty refunds for goods imported since the effective date of the TCO.
Key Provisions
The primary sections of the Customs Act 1901 (the Act) that are relevant to Tariff Concession Orders (TCOs) include sections 269C, 269F, 269P, and 269S. Section 269F (3) specifies the process by which a person may apply to the Chief Executive Officer of Customs (the CEO) for a TCO. Section 269C sets out the core criteria that must be met for the CEO to grant a TCO, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Section 269P (3) requires that if the CEO is satisfied that the application meets the core criteria, a written order (the TCO) must be made. Section 269S outlines the effect of the TCO, including that it does not impose liabilities or disadvantage any person other than the Commonwealth in respect of actions taken before the TCO was registered.
The obligations and requirements imposed by the Act on parties applying for a TCO include ensuring that the application is lodged in a timely manner and that it is for goods not specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. The CEO is required to assess the application against the core criteria in section 269C and to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, as per section 269K(1). If the CEO is satisfied that the application meets the criteria and no objections are received, a TCO must be issued.
Failure to comply with the requirements of the Act may result in civil or criminal consequences. However, the Explanatory Statement does not specify any particular offences or penalties related to the making of a TCO. The general provisions of the Customs Act 1901 and associated regulations would apply in cases of non-compliance, which could include fines or imprisonment for serious breaches. For instance, section 136 of the Customs Act 1901 provides for penalties for false statements or declarations, and section 141 provides for penalties for fraudulent importation or exportation of goods. These penalties can include substantial fines or imprisonment, depending on the severity of the offence.
In summary, the key provisions of the Customs Act 1901 relating to TCOs involve the application process, core criteria for approval, and the issuing of the TCO itself. The obligations on applicants and the CEO include ensuring applications are made correctly and reviewed against the statutory criteria. While the Explanatory Statement does not detail specific penalties for breaches in the TCO process, general provisions of the Customs Act and associated regulations would apply, potentially involving fines or imprisonment for serious offences.