EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138537
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.
Acora Reneco Group Pty Ltd applied for a TCO in respect of certain log debarking machines on 18 November 2011.
Instrument
TCO No 1138537 was made on 07 February 2012. It declares that those certain log debarking machine 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. 1138537 is taken to have come into force on 18 November 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 for the administration of customs and excise in Australia. This legislation was introduced to address the need for a structured approach to managing customs duties and tariffs. The Customs Act 1901 facilitates the efficient flow of trade by providing clear guidelines for the application and imposition of customs duties. One of the mechanisms within this Act is the establishment of Tariff Concession Orders (TCOs), which allow for the reduction or exemption of customs duty on certain goods under specific conditions. The Act empowers the Chief Executive Officer of Customs to make these orders, ensuring that the application of lower duty rates is carefully controlled and subject to rigorous assessment to prevent abuse of the system. The primary policy objective is to support Australian industries by making imported goods more competitive, thereby encouraging trade and economic growth.
Scope and Application
The Tariff Concession Instrument No. 1138537, made under section 269F of the Customs Act 1901, applies to individuals or entities seeking a concession on customs duty for specific goods. In this case, the instrument concerns the application made by Acora Reneco Group Pty Ltd for tariff concessions on certain log debarking machines. The instrument's scope is limited to these particular machines, and it applies to the reduction of the duty rate from 5% to free. The application of the Customs Act 1901 is broad, extending to all entities involved in the importation of goods into Australia. The geographic reach of this Act is national, as it is a Commonwealth Act. However, the Act excludes certain goods specified in section 269SJ from being subject to a Tariff Concession Order (TCO). The Act may also extend its application through subordinate instruments, such as regulations, which can provide further detail on the implementation and administration of TCOs.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) relevant to the Tariff Concession Order (TCO) No. 1138537 include sections 269C, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO for specific goods, while section 269C outlines the core criteria that must be met for the application to be considered valid, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied the application meets the core criteria, they must make a written order (a TCO) specifying that the goods in question are subject to a prescribed tariff item. Section 269SJ details the goods that cannot be subject to a TCO.
The Act imposes specific obligations on the CEO, including the requirement to assess whether an application meets the core criteria as stipulated in section 269C, and to make a written TCO if satisfied. It also mandates that the CEO publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as per subsection 269K(1). If no submissions are received, the CEO must proceed with the order. Additionally, the Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and that no new liabilities are imposed on them by the TCO.
Failure to comply with the requirements of the Act may result in civil or criminal penalties. The Act does not explicitly state penalties for non-compliance with TCO provisions, but general non-compliance with customs regulations can result in significant civil penalties, including fines, and criminal charges which may lead to imprisonment. The exact penalties would depend on the specific nature and severity of the breach.
In summary, TCO No. 1138537, made under section 269P(3) of the Customs Act 1901, effectively applies a zero rate of customs duty on certain log debarking machines, provided the CEO is satisfied that no substitutable goods are produced in Australia. The CEO must ensure compliance with the core criteria and any other relevant statutory obligations, and the Act safeguards the rights and liabilities of non-Commonwealth entities. The consequences of non-compliance are potentially severe, including civil and criminal penalties, although the specific penalties are not detailed within the TCO itself.