EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1132326
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.
Caterpillar of Australia applied for a TCO in respect of certain motors on 22 September 2011.
Instrument
TCO No 1132326 was made on 21 December 2011. It declares that those certain motors 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. 1132326 is taken to have come into force on 22 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 to provide a framework for the administration of customs duties and related matters in Australia. Among its provisions, Part XVA establishes a scheme for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities to reduce the customs duty payable on specified goods. Enacted by the Australian Parliament, this legislation aims to facilitate trade by reducing the cost of imported goods under certain conditions. The policy objective is to support industries by lowering the tariff rates on goods where no substitutable products are produced in Australia, thereby encouraging competitive markets and economic efficiency. Tariff Concession Instrument No. 1132326, made under this Act, exemplifies the application of these provisions by providing a zero rate of customs duty on certain motors, following a successful application by Caterpillar of Australia. This instrument was introduced to ensure that the tariff concessions are granted in accordance with the established criteria and to maintain the integrity of the customs duty system.
Scope and Application
The Tariff Concession Instrument No. 1132326 applies to certain motors, specifically those for which Caterpillar of Australia sought a Tariff Concession Order (TCO) under Part XVA of the Customs Act 1901. This legislation enables the Chief Executive Officer of Customs to grant tariff concessions, resulting in a reduced customs duty for eligible goods. The application of the Act pertains to entities or individuals importing these specified motors, thereby benefiting them by lowering the duty rate from the general 5% to a free rate. The geographical scope of this Act is national, as it falls under the Customs Act 1901, which operates throughout Australia. The Act does not specify exclusions or exemptions beyond those outlined in section 269SJ, which disqualifies certain goods from tariff concessions. Additionally, the Act allows for the expansion or restriction of its application through subordinate instruments, ensuring flexibility in its implementation.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Specifically, section 269F (1) allows an application to be made to the CEO for a TCO concerning specific goods. The Act stipulates that if the CEO determines the application is not for goods listed in section 269SJ, which are ineligible for a TCO, the CEO must assess whether the application meets the core criteria outlined in section 269C. According to this section, an application satisfies the core criteria if, on the date it was lodged, no substitutable goods were produced in Australia in the ordinary course of business.
Under section 269B of the Act, the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' have specific meanings as defined in sections 269D, 269E, and 269F respectively. To clarify, substitutable goods refer to those produced in Australia that can be used for the same purposes, including design, as the goods in question. If the CEO is satisfied that the application meets the core criteria, section 269P(3) requires the CEO to issue a written order, known as a TCO, specifying that the goods in question are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995 (the Tariff). This TCO declares the applicable duty rate, which can be set at zero or a reduced rate compared to the general duty rate.
The Act imposes certain obligations on the CEO regarding the process of issuing a TCO. Under subsection 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application. This notice invites any person who believes there are reasons why the TCO should not be made to submit their views to the CEO. In the case of TCO No 1132326, the CEO did not receive any submissions in response to this invitation. Once the CEO decides that an application meets the core criteria, section 269S(1) mandates that the TCO be considered effective from the date the application was lodged.
The Act also specifies the consequences of breaching its provisions. While it does not explicitly detail offences or penalties in the explanatory statement, the failure to comply with the requirements of the Customs Act 1901, including the provisions for TCOs, could potentially lead to civil or criminal penalties. These penalties can vary widely depending on the nature and severity of the breach. For instance, knowingly making a false statement in an application for a TCO could be considered a fraudulent act under the Commonwealth Criminal Code Act 1995, potentially leading to imprisonment for up to five years or a fine, or both. Additionally, the Act provides for the imposition of pecuniary penalties for breaches, which can be significant and are determined by the seriousness of the breach and other relevant factors.