EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140594
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.
Bombardier applied for a TCO in respect of certain distribution system on 06 December 2011.
Instrument
TCO No 1140594 was made on 06 March 2012. It declares that those certain distribution system 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. 1140594 is taken to have come into force on 06 December 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 Parliament of Australia, provides a framework for the administration of customs duties and tariffs. One aspect of this framework involves the issuance of Tariff Concession Orders (TCOs), which offer reduced customs duty rates on certain imported goods. The Act, specifically under Part XVA, empowers the Chief Executive Officer of Customs to grant these concessions if certain criteria are met. The core criteria, outlined in section 269C, require that no substitutable goods are produced in Australia at the time the application is lodged. The explanatory statement accompanying Tariff Concession Instrument No. 1140594, enacted in 2012, details a specific instance where Bombardier applied for and was granted a TCO for certain distribution systems, resulting in a reduction of the customs duty rate from 5% to free. This mechanism is designed to support Australian industries by providing tariff relief on imported goods that do not have domestic alternatives, thus promoting competitiveness and economic efficiency.
Scope and Application
The Tariff Concession Instrument No. 1140594 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO), specifically in this case, certain distribution systems for which Bombardier applied. This Act applies to individuals or entities that are involved in the importation of these goods, and its geographic reach is national, as it pertains to the Commonwealth of Australia. The application of a TCO is subject to the core criteria outlined in section 269C of the Act, which requires that no substitutable goods are produced in Australia on the day the application was lodged. Exclusions from this Act include goods specified in section 269SJ of the Act, which are ineligible for a TCO. The instrument extends the application of the Act by providing a lower rate of customs duty, in this instance, reducing it from 5% to free for the specified goods. The Act allows for further specification and modification of its application through subordinate instruments, such as the Customs Tariff Act 1995, which provides the prescribed tariff items applicable to goods under a TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1140594 under the Customs Act 1901 (section 269C, 269B, 269E, 269D, and 269P) provide the framework for the application and approval of Tariff Concession Orders (TCOs). According to these sections, an application for a TCO can be made by a person to the Chief Executive Officer (CEO) of Customs if the goods in question are not specified in section 269SJ and meet the core criteria outlined in section 269C. This means that on the day the application is lodged, no substitutable goods must be produced in Australia in the ordinary course of business (section 269C). Additionally, if the CEO is satisfied that the application meets the criteria, they must issue a written order, or TCO, that specifies the goods and the relevant item from Schedule 4 of the Customs Tariff Act 1995, thereby reducing the rate of customs duty for those goods.
The obligations and requirements imposed by the Act on the parties involved are primarily centred around the application and review process for TCOs. The CEO of Customs is mandated to assess each application against the core criteria (section 269C), which includes determining whether substitutable goods are being produced in Australia. Additionally, the CEO must ensure that a notice inviting submissions from the public is published in the Gazette as soon as practicable after accepting a TCO application as valid (subsection 269K(1)). The CEO is also responsible for making the final decision on whether to issue a TCO based on the evidence provided and any submissions received.
There are no explicit offences, penalties, or civil/criminal consequences outlined in the explanatory statement for breach of the TCO provisions. However, the Act and associated regulations likely impose various compliance requirements and potential penalties for non-compliance with customs laws in general. For example, under the Customs Act 1901, failure to comply with certain provisions can result in penalties, including fines and imprisonment. In the specific context of TCOs, while the explanatory statement does not detail penalties for non-compliance, it is reasonable to infer that breaches of the terms under which a TCO is granted could lead to similar penalties as those applicable to general customs law violations.