EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1129193
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.
BP Australia Pty Ltd applied for a TCO in respect of certain mixing and shredding machines on 26 August 2011.
Instrument
TCO No 1129193 was made on 07 November 2011. It declares that those certain mixing and shredding machines 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. 1129193 is taken to have come into force on 26 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 by the Australian Parliament to provide for the regulation of customs and excise duties. One of the mechanisms established by the Act is the Tariff Concession Order (TCO), which allows for the reduction or elimination of customs duties on specified goods under certain conditions. This legislative framework was introduced to address the need for flexibility in tariff rates to support economic development and to ensure that Australian industries remain competitive by reducing the cost of imported goods necessary for their operations. The explanatory statement for Tariff Concession Instrument No. 1129193, issued under the Act, details the process by which BP Australia Pty Ltd successfully applied for tariff concessions on certain mixing and shredding machines. The instrument was issued on 7 November 2011, following the application on 26 August 2011, and it declared that these machines would be subject to a zero rate of customs duty, effective from the date of the application. The policy objective of this measure was to provide tariff relief, thereby reducing the cost burden on BP Australia and potentially passing on savings to consumers, while ensuring that no existing legal rights or obligations of parties other than the Commonwealth were adversely affected.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which applies to goods specified in such orders. The application for a TCO is open to any person seeking a lower rate of customs duty on goods that meet the core criteria outlined in section 269C of the Act, namely that no substitutable goods are produced in Australia in the ordinary course of business. The TCO mechanism extends to all Commonwealth jurisdictions and applies to any goods that fulfil the criteria, regardless of the industry or entity involved, provided the goods are not listed in section 269SJ as ineligible for tariff concessions. This instrument has a national reach and applies uniformly across all states and territories of Australia. The rights of third parties are protected, ensuring that the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken prior to the TCO's effective date. Subordinate instruments may further detail the application process and criteria, but no exclusions or exemptions are specified beyond those already mentioned in the Act itself.
Key Provisions
The main operative sections of this legislation include section 269F, which allows a person to apply to the CEO for a Tariff Concession Order (TCO), and section 269C, which sets out the core criteria for the CEO to consider when deciding whether to grant a TCO. Section 269P(3) further mandates the CEO to make a written order if the application meets the core criteria, and section 269S(1) specifies that the TCO will be taken to have come into force on the day the application was lodged. These provisions collectively ensure that the process for applying for and granting a TCO is clear and well-defined.
The obligations imposed by the Act on the parties involved primarily focus on the application and assessment process. Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. This ensures transparency and allows for stakeholder input. Additionally, section 269SJ specifies the types of goods that cannot be subject to a TCO, guiding the CEO in evaluating applications. The CEO must ensure that the application does not concern these restricted goods and must meet the criteria set out in section 269C before granting a TCO.
Failure to comply with the provisions of the Act can result in various consequences. While the explanatory statement does not explicitly detail offences or penalties, it is understood that any breach of the Act's provisions could potentially lead to civil or criminal penalties, depending on the nature and severity of the breach. Given the structured nature of the application process and the specific criteria outlined, any non-compliance or misrepresentation in an application could be subject to scrutiny and appropriate legal action. The maximum penalties for such breaches would be determined in accordance with the relevant sections of the Customs Act 1901 and associated regulations.