EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1141302
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.
Hitachi Construction Machinery applied for a TCO in respect of certain crawler machines parts on 12 December 2011.
Instrument
TCO No 1141302 was made on 06 March 2012. It declares that those certain crawler machines parts 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. 1141302 is taken to have come into force on 12 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 Australian Parliament, establishes a framework for the administration of customs duties and the regulation of imports and exports. One of the mechanisms within this Act is the Tariff Concession Order (TCO) scheme, which allows for the reduction or exemption of customs duties on certain goods under specific conditions. The problem this legislation addresses is the need to provide relief to importers and consumers by reducing the cost of certain imported goods, thereby encouraging trade and potentially aiding domestic industries that rely on these imports as inputs. TCO No. 1141302, made under this scheme, specifically targets certain crawler machine parts, granting them a concession from the general duty rate of 5% to a free rate, based on the determination that no substitutable goods are produced in Australia. The policy objective of this particular TCO is to alleviate the financial burden on importers of these specific goods, which would otherwise have to bear the full customs duty, thereby supporting the broader economic aim of fostering competitive markets and reducing costs for end consumers.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) scheme, facilitates the application of reduced customs duties on specified goods that are not produced in Australia in the ordinary course of business. The CEO of Customs is responsible for determining whether a TCO application meets the core criteria, primarily that no substitutable goods are produced domestically. If the CEO is satisfied that these criteria are met, they issue a TCO, effectively applying a lower duty rate to the specified goods. This particular instrument, TCO No. 1141302, pertains to certain crawler machine parts, where the general duty rate of 5% is reduced to free duty. The TCO applies to the entity that made the application, in this case, Hitachi Construction Machinery, and affects the rights of importers who can now claim refunds for duties paid on the goods since the date the TCO was taken to have come into force. The TCO has no retrospective effect and does not disadvantage or impose liabilities on any person other than the Commonwealth.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269K, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). Section 269C specifies that a TCO 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 269K requires the CEO to publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made. Finally, section 269S dictates that a TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The Act imposes several obligations and requirements on parties involved in the process of obtaining a TCO. Firstly, the CEO must determine whether the TCO application meets the core criteria, as specified in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a written order, as stated in section 269P(3). Secondly, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, as outlined in section 269K(1). This notice must invite any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO is also required to ensure that the TCO does not affect the rights of any person as at the date of registration in a way that disadvantages that person or imposes liabilities on them in respect of anything done or omitted to be done before the date of registration.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the text for breach of the Act or its provisions. However, the Act does provide for the imposition of a refund of duty on goods imported since the day on which the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations. This is a financial consequence for importers who benefit from the TCO. Furthermore, the Act ensures that the TCO does not impose any liabilities on any person, safeguarding the rights of individuals and entities involved in the import and export process.