EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1130438
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.
Rosmech Sales and Service Pty Ltd applied for a TCO in respect of certain chassis bodies on 07 September 2011.
Instrument
TCO No 1130438 was made on 05 December 2011. It declares that those certain chassis bodies 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. 1130438 is taken to have come into force on 07 September 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 and provides a comprehensive framework for the administration of customs duties and other import and export controls. Among its provisions, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism enables a lower rate of customs duty to apply to goods that are the subject of a TCO, provided certain criteria are met. Specifically, a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The Tariff Concession Instrument No. 1130438, issued on 5 December 2011, was introduced in response to an application by Rosmech Sales and Service Pty Ltd for certain chassis bodies, declaring that these goods are subject to item 50 of Schedule 4 to the Tariff, with the rate of duty being free instead of the general rate of 5%. The policy objective is to support Australian industries by reducing the customs duty on specific goods, thereby making them more competitive in the market.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to individuals and entities seeking tariff concessions on goods, thereby impacting industries reliant on the importation of specified products. The geographic reach of the Act is national, as it pertains to the Commonwealth of Australia. The Act allows for the application of reduced customs duty rates on goods subject to a TCO, provided the goods are not specified in section 269SJ of the Act as ineligible for such concessions. The application process for a TCO is initiated under section 269F, where an applicant must satisfy the CEO that no substitutable goods are produced in Australia, as per section 269C. The CEO’s decision to issue a TCO is also subject to the criteria outlined in section 269P(3), which mandates that if the core criteria are met, a TCO must be made. This legislation does not extend its application through subordinate instruments, but it provides a clear process for its implementation and review.
Key Provisions
The main operative sections of the Customs Act 1901, as they relate to Tariff Concession Orders (TCOs), require that applications for TCOs be made to the Chief Executive Officer of Customs (CEO) (section 269F). The CEO is mandated to assess these applications to determine if they meet the core criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged (section 269C). If the CEO is satisfied that the application meets the core criteria, a written TCO must be issued, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In this particular case, Tariff Concession Order No. 1130438 was issued on 5 December 2011, granting a duty-free status to certain chassis bodies, which would otherwise attract a 5% duty rate (item 50 of Schedule 4 to the Tariff).
The obligations and requirements imposed by the Act on the parties it governs include the obligation for applicants to ensure that their applications for TCOs are made in good faith and are supported by sufficient evidence that no substitutable goods are being produced in Australia on the application date. The CEO, on the other hand, has the responsibility to rigorously evaluate each application to verify compliance with the core criteria before issuing a TCO. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made, as stipulated in section 269K(1) of the Act. This notice serves to uphold the transparency and fairness of the process. In this instance, no submissions were received in response to the notice published for TCO No. 1130438.
The Act outlines specific consequences for breaches of its provisions, although the explanatory statement does not detail the maximum penalties. Generally, penalties for breaches of the Customs Act 1901 can include fines and imprisonment, depending on the severity of the offence. For instance, under section 243 of the Act, any person who contravenes a provision of the Act can be subject to a penalty of up to $22,200 or imprisonment for up to 2 years, or both, for a single offence. Furthermore, companies may face additional penalties under the Corporations Act 2001, and officers of the company could be personally liable under the criminal code. The consequences underscore the importance of compliance with the Act's provisions, particularly regarding the accurate and truthful submission of information in TCO applications and the CEO's diligent assessment of these applications.