EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131713
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.
Bombardier applied for a TCO in respect of certain driving bogies on 15 September 2011.
Instrument
TCO No 1131713 was made on 21 December 2011. It declares that those certain driving bogies 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. 1131713 is taken to have come into force on 15 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, enacted by the Australian Parliament, establishes a framework within which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) to provide a lower rate of customs duty on certain goods. This legislative framework was introduced to address the need for tariff concessions on specific goods where no substitutable goods are produced in Australia in the ordinary course of business. The explanatory statement outlines that under section 269F of the Act, an application for a TCO can be lodged, subject to certain conditions, including the prohibition on TCOs for goods specified in section 269SJ. The CEO evaluates the application against the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. Tariff Concession Instrument No. 1131713, made on 21 December 2011, exemplifies the application of this scheme, granting a tariff concession on certain driving bogies by Bombardier, effective from 15 September 2011. This instrument was introduced without any adverse submissions, and it ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Scope and Application
The Tariff Concession Instrument No. 1131713 applies to the process of tariff concessions for certain driving bogies as per the Customs Act 1901. This Act, which is of Commonwealth jurisdiction, provides the legal framework under which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to lower the rate of customs duty on specified goods. The TCO in question was applied for by Bombardier and pertains to certain driving bogies, which are now subject to a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 15 September 2011. The Act mandates that the CEO must make a written order if satisfied that the application meets the core criteria, which include the absence of substitutable goods produced in Australia. The TCO ensures that no person, other than the Commonwealth, is disadvantaged or subjected to liabilities in respect of actions taken before the TCO's effective date. Importers of these goods, however, will benefit from being able to apply for a refund of duty on imports since the TCO's effective date.
Key Provisions
The main operative sections of the Customs Act 1901, specifically the Tariff Concession Order (TCO) provisions, allow the Chief Executive Officer of Customs (CEO) to reduce customs duty rates on certain goods when an application is made and approved (sections 269F, 269C, 269B, 269D, 269E and 269P). Section 269F allows for applications to be submitted to the CEO, while section 269C mandates that the CEO must approve the application if it meets the core criteria, which include the absence of substitutable goods produced in Australia (section 269C). Once a TCO is approved, it is published in the Gazette, inviting public submissions before finalisation (subsection 269K(1)). A TCO comes into force on the date of application submission (subsection 269S(1)).
The Act imposes several obligations on the parties involved. The CEO must determine if the application meets the core criteria, which involve assessing whether substitutable goods are produced in Australia (section 269C). The CEO is also required to publish a notice in the Gazette after accepting the application as valid, allowing for any objections (subsection 269K(1)). Bombardier, as the applicant, must ensure that their application is valid and meets all specified criteria to qualify for the tariff concession. Importers of the goods covered by the TCO may have obligations to apply for a refund of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements of the Customs Act 1901 can result in both civil and criminal consequences. Civil penalties may include fines and other financial penalties, depending on the severity and intent of the breach. Criminal penalties can be imposed for more serious offences, with maximum penalties specified in the relevant sections of the Act. These can include imprisonment and significant fines, reflecting the seriousness of non-compliance with customs regulations. It is essential for all parties to adhere to the provisions of the Act to avoid these potential penalties.