EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1133863
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 Ltd applied for a TCO in respect of certain dowel pins on 06 October 2011.
Instrument
TCO No 1133863 was made on 04 January 2012. It declares that those certain dowel pins 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. 1133863 is taken to have come into force on 06 October 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, addresses the issue of establishing a scheme for Tariff Concession Orders (TCOs) which provide lower rates of customs duty on certain goods. This Act, through its Part XVA, enables the Chief Executive Officer of Customs to issue TCOs based on applications that meet specific criteria, primarily ensuring that no substitutable goods are produced in Australia. The policy objective behind this scheme is to provide economic benefits by reducing customs duty on certain imported goods, thereby encouraging trade and potentially lowering costs for businesses and consumers. The Explanatory Statement for Tariff Concession Instrument No. 1133863 details a specific instance where Caterpillar of Australia Ltd successfully applied for a TCO concerning certain dowel pins, resulting in a tariff reduction from 5% to free duty. This particular TCO was effective from the date of the application, 6 October 2011, and did not impose any liabilities or disadvantage any person other than the Commonwealth.
Scope and Application
The Customs Act 1901, as modified by Tariff Concession Instrument No. 1133863, applies to specific goods that are subject to a Tariff Concession Order (TCO). This instrument is designed to benefit entities that import particular goods by allowing them to pay a reduced rate of customs duty. The Act applies to the Chief Executive Officer of Customs who has the authority to make a TCO for goods, provided that the application for such an order meets the core criteria as specified in section 269C of the Act. This includes the condition that no substitutable goods are produced in Australia at the time the application is lodged. The geographic reach of this legislation is national, applying across Australia as per the provisions of the Customs Act 1901. The instrument specifies exclusions for goods listed in section 269SJ of the Act, which cannot be subject to a TCO. The application of the Act can be extended or restricted through subordinate instruments, which may include further regulations or notifications that detail specific goods or industries affected.
Key Provisions
The Customs Act 1901 (the Act) and the associated Customs Tariff Act 1995 establish a framework for the application and implementation of Tariff Concession Orders (TCOs), which are intended to provide relief from certain customs duties. Section 269F allows for applications to the Chief Executive Officer of Customs (the CEO) for TCOs, provided the goods in question are not specified in section 269SJ as ineligible for such concessions. If the CEO determines that the application meets the core criteria outlined in section 269C, they must make a TCO. This process involves verifying that no substitutable goods are produced in Australia on the day the application is lodged, as defined by sections 269D, 269E and 269F. Upon meeting these criteria, a written TCO is issued under section 269P(3), specifying the lower rate of customs duty applicable to the goods.
The obligations imposed by the Act on the parties involved include the requirement for applicants to submit valid TCO applications that meet the specified criteria. The CEO must review each application to ensure it adheres to the conditions set out in the Act, including publishing a notice in the Gazette under section 269K(1) and allowing for any submissions from interested parties. If no objections are received, the CEO proceeds to issue the TCO. Importers, once a TCO is in place, have the right to apply for a refund of duty on goods imported since the TCO's effective date, as stipulated under regulation 126(1)(r).
The Act and associated regulations do not explicitly outline specific offences or penalties for breaches of the TCO provisions. However, general provisions of the Customs Act 1901 may apply, including potential penalties for false statements or fraudulent activities related to customs duties. For instance, misleading statements or providing false information during the application process could lead to criminal charges and penalties. Although the explanatory statement does not specify maximum penalties, breaches of the Act could result in substantial fines or imprisonment, depending on the severity of the offence and the discretion of the court. The absence of specific penalties for TCO breaches may imply that general customs laws are applied in such cases, ensuring that any misconduct is appropriately addressed.