EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1134470
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.
Tyrolit Pty Ltd applied for a TCO in respect of certain drill machines on 13 October 2011.
Instrument
TCO No 1134470 was made on 04 January 2012. It declares that those certain drill machines 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. 1134470 is taken to have come into force on 13 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, provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These concessions offer reduced customs duty rates on specific goods, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. The explanatory statement for Tariff Concession Instrument No. 1134470, made under this Act, addresses an application by Tyrolit Pty Ltd for a tariff concession on certain drill machines. The instrument was enacted on 4 January 2012 and declares that the specified drill machines are subject to a zero-duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 13 October 2011. This legislative action was taken after satisfying the core criteria outlined in the Customs Act, ensuring that no substitutable goods were produced in Australia, thereby facilitating reduced duty rates and benefiting importers through potential duty refunds.
Scope and Application
The Customs Act 1901, specifically Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to specific goods that meet certain criteria, primarily relating to the non-production of substitutable goods in Australia at the time of application. The Act applies to any individual or entity seeking a tariff concession for particular goods, effectively reducing or eliminating customs duties on those goods as specified in the TCO. The geographic reach of the Act is national, as it operates under the authority of the Commonwealth and applies across Australia. There are exclusions, such as goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. The Act can extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the duty rates and schedules affected by TCOs. The application of the Act is further detailed in the Customs (Tariff) Regulations 1999, which provide additional guidelines and operational details for the issuance and effects of TCOs.
Key Provisions
The Customs Act 1901 (the Act) contains provisions for the establishment of Tariff Concession Orders (TCOs) through Part XVA. Section 269F allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO for specific goods. If the application is not for goods specified in section 269SJ, which lists those that cannot be subject to a TCO, the CEO must assess whether the application meets the core criteria (section 269C). The 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 (section 269C). Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269P respectively. If the CEO determines that the application meets the core criteria, they must issue a written order, a TCO, specifying that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with the rate of duty as specified in the order (subsection 269P(3)).
The obligations imposed on the CEO include reviewing TCO applications to ensure they meet the core criteria and making a written order if the criteria are met. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). In the case of Tyrolit Pty Ltd’s application for a TCO concerning certain drill machines, the CEO did not receive any submissions in response to the published notice. The CEO was satisfied that no substitutable goods were produced in Australia, and therefore issued TCO No. 1134470, declaring that the specified drill machines are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%.
The Customs Act 1901 does not explicitly state any specific offences, penalties, or civil/criminal consequences for breaches related to TCOs. However, it is understood that the Act’s overarching regulatory framework applies, which could include civil or criminal penalties for non-compliance with customs regulations. The TCO itself does not impose any liabilities on any person and does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person. Importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.