EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138540
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.
MacDonald Johnston Pty Ltd applied for a TCO in respect of certain cleaning vehicles on 18 November 2011.
Instrument
TCO No 1138540 was made on 07 February 2012. It declares that those certain cleaning vehicles 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. 1138540 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, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act addresses the issue of facilitating lower rates of customs duty on specific goods through the issuance of TCOs, thereby supporting economic competitiveness and access to essential goods. The policy objective is to provide relief by reducing customs duty rates for certain goods, as long as they meet the specified criteria and do not have substitutable alternatives produced within Australia. This legislative mechanism was introduced to encourage trade and economic efficiency by making certain imported goods more affordable, thus benefiting both businesses and consumers. The explanatory statement for Tariff Concession Instrument No. 1138540, issued on 7 February 2012, exemplifies this process by detailing the application and approval of a TCO for certain cleaning vehicles, which now enjoy a duty-free status under the Customs Tariff Act 1995.
Scope and Application
The Tariff Concession Instrument No. 1138540 applies to individuals and entities seeking tariff concessions on specific goods under the Customs Act 1901. This Act provides a framework for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that apply lower rates of customs duty on certain goods. The Act applies to any person or entity that makes an application for a TCO in respect of goods not specified in section 269SJ of the Act, which outlines the goods that cannot be subject to a TCO. The application process requires the CEO to assess whether the goods for which a TCO is sought meet the core criteria, which include the absence of substitutable goods produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia and its customs duties. The Act extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the tariff items that may be altered by a TCO. The commencement of a TCO is effective from the day the application is lodged, with no retroactive effect on past transactions or duties.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1138540, made under the Customs Act 1901, pertain to the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (s 269F). The CEO must consider an application for a TCO if it does not relate to goods specified in section 269SJ of the Act (s 269F(1)). The CEO must then decide whether the application meets the core criteria set out in section 269C of the Act, which includes the requirement that no substitutable goods were produced in Australia on the day the application was lodged (s 269C). If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (s 269P(3)). For this particular TCO, the CEO was satisfied that no substitutable goods were produced in Australia in relation to certain cleaning vehicles, and accordingly, a TCO was made, effective from the day the application was lodged (s 269S(1)).
The obligations and requirements imposed by the Act on the parties or entities it governs include the responsibility of the CEO to consider applications for TCOs (s 269F) and to determine whether the applications meet the core criteria, which includes assessing whether substitutable goods were produced in Australia (s 269C). The CEO must also publish a notice in the Gazette inviting submissions from interested parties on whether a TCO should be made (s 269K(1)). In this case, the CEO did not receive any submissions in response to the notice. Additionally, 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 (s 269S(3)).
There are no specific offences, penalties, or civil/criminal consequences for breach outlined in the explanatory statement. However, the TCO does provide for a lower rate of customs duty for the goods it applies to, which is free instead of the general rate of 5% (Schedule 4, item 50). Any party that breaches the conditions of the TCO may be subject to the general legal consequences of breach of contract or other applicable legislation, but the explanatory statement does not specify any particular penalties or consequences.