EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131714
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 tram car bogies on 15 September 2011.
Instrument
TCO No 1131714 was made on 21 December 2011. It declares that those certain tram car 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. 1131714 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 was enacted by the Australian Parliament to facilitate the administration of customs duties and other import charges. One of the mechanisms introduced by the Act is the ability to issue Tariff Concession Orders (TCOs), which allow for a lower rate of customs duty on specified goods, provided certain criteria are met. Instrument No. 1131714 under this scheme was introduced to address a specific need identified by Bombardier for tariff concessions on certain tram car bogies. The policy objective here is to ensure that Australian businesses can compete fairly in the global market by reducing the cost of importing certain goods, thus encouraging trade and economic growth. The instrument was made on 21 December 2011, following an application by Bombardier on 15 September 2011, and no submissions were received in opposition to the concession. The TCO is effective from the date the application was lodged, and it provides duty-free treatment for the specified tram car bogies, benefiting importers by potentially allowing them to claim refunds on duties paid prior to the concession.
Scope and Application
The Tariff Concession Instrument No. 1131714 applies to the import of certain tram car bogies, as specified by Bombardier’s application on 15 September 2011, which was subsequently approved by the Chief Executive Officer of Customs (CEO) under section 269F of the Customs Act 1901. The Act allows for the reduction or elimination of customs duties on certain goods if the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business. This instrument specifically exempts the tram car bogies from the general 5% duty rate, applying instead the free rate as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995. The scope of this concession is limited to the goods specified in the application, and it is effective from the date the application was lodged, 15 September 2011. The instrument does not affect any pre-existing rights or liabilities incurred prior to its effective date, and it does not impose new liabilities on any persons. Additionally, it does not apply to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions.
Key Provisions
The main operative sections of this legislation concern the application and determination of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F (1) allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. The CEO is required to decide whether the application meets the core criteria, which are detailed in sections 269C, 269B, and 269D of the Act. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods in question are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a concessional rate of customs duty (section 269P(3)).
The Act imposes certain obligations on the parties involved in the TCO process. Firstly, the CEO must accept a TCO application as valid and subsequently determine whether it meets the core criteria set out in section 269C. Should the application meet these criteria, the CEO must make a written order as specified in section 269P(3). Additionally, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)).
Failure to comply with the requirements of the Customs Act 1901 and related regulations may result in various civil and criminal consequences. Specifically, breaches of the Act may lead to fines or imprisonment. While the explanatory statement does not provide explicit details on the penalties, under the Customs Act 1901, serious breaches can result in substantial fines and imprisonment terms. For instance, section 233 of the Customs Act 1901 imposes penalties including fines up to 10,000 penalty units or imprisonment for up to 10 years for serious breaches. The explanatory statement also notes that the TCO does not affect the rights of any person in a way that would disadvantage them or impose liabilities for actions taken before the TCO was registered, ensuring that the rights of importers are beneficially affected.