EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0411084
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.
ConocoPhillips Australia PtyLtd applied for a TCO in respect of certain power and steam generators on 25 October 2004.
Instrument
TCO No 0411084 was made on 3 March 2005. It declares that those certain power and steam generators 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 3%.
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. One submission objecting to the TCO application was received from Jord International Pty Ltd.
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. 0411084 is taken to have come into force on 25 October 2004.
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, establishes a framework for tariff concession orders (TCOs) to be issued by the Chief Executive Officer of Customs (CEO). This Act was introduced to address the need for reduced customs duties on certain goods that are not produced in Australia, thereby encouraging importation and supporting industries reliant on imported components. The policy objective is to facilitate trade by providing tariff concessions for goods where no suitable Australian-made alternatives exist. The explanatory statement details the process by which ConocoPhillips Australia Pty Ltd successfully applied for a TCO for certain power and steam generators, leading to a reduced duty rate from 5% to 3%. This legislative mechanism ensures that the CEO considers objections from interested parties, as demonstrated by the submission from Jord International Pty Ltd, before issuing a TCO. The TCO, once registered, benefits importers by allowing them to apply for duty refunds on goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0411084 under the Customs Act 1901 applies to entities seeking tariff concessions for specific goods, in this case, certain power and steam generators, by reducing the customs duty from the general rate of 5% to a concessional rate of 3%. The instrument is applicable to any person or entity that is not specified in section 269SJ of the Act, which excludes certain goods from being subject to a Tariff Concession Order (TCO). The application of this instrument extends to the entire Commonwealth of Australia and is administered by the Chief Executive Officer of Customs. The application process requires that no substitutable goods are produced in Australia at the time the application is made, as defined under sections 269C, 269D, and 269E of the Act. Any objections to the TCO must be lodged with the CEO following the publication of the application in the Gazette, as per section 269K(1). This instrument became effective from the date of the application, 25 October 2004, and provides benefits to importers by allowing them to apply for a refund of duty on goods imported since that date.
Key Provisions
The primary operative sections of this legislation revolve around the establishment and application of Tariff Concession Orders (TCO) under the Customs Act 1901 (section 269F). If an application is made by a person for a TCO in respect of certain goods, and the Chief Executive Officer of Customs (CEO) is satisfied that the application does not pertain to goods that cannot be subject to a TCO (section 269SJ), the CEO must determine whether the application meets the core criteria. These criteria are outlined in section 269C, which states that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269F respectively. If the CEO determines that the application meets the core criteria, they are required to issue a written order (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. For example, any person wishing to apply for a TCO must ensure that their application is made in accordance with the provisions of the Customs Act 1901 (section 269F). The CEO is required to make a decision on whether the application meets the core criteria within the stipulated timeframe. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe there are reasons why the TCO should not be made (subsection 269K(1)). This ensures transparency and provides an opportunity for stakeholders to voice their concerns.
The legislation also outlines the consequences for non-compliance and breaches. While the explanatory statement does not explicitly detail specific offences, penalties, or civil or criminal consequences for breach, it is implied that failure to adhere to the provisions of the Customs Act 1901 and the terms of any TCO could lead to legal repercussions. Typically, breaches of customs regulations can result in fines, penalties, and other legal actions as stipulated under relevant sections of the Customs Act 1901. The maximum penalties for such breaches can vary significantly depending on the nature and severity of the offence, but they are usually substantial enough to deter non-compliance. Importers, in particular, could face financial penalties if they do not correctly apply for refunds of duty under the conditions set out in the TCO.
Overall, the legislation establishes a structured process for the application and approval of TCOs, ensuring that eligible goods receive the appropriate tariff concessions while maintaining the integrity and enforcement of customs regulations. The provisions aim to balance the interests of applicants, the CEO, and other stakeholders, ensuring that the process is transparent, fair, and legally sound.