EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0413470
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.
Invensys Appliance Controls applied for a TCO in respect of certain energy regulator switches on 9 December 2004.
Instrument
TCO No 0413470 was made on 11 February 2005. It declares that those certain energy regulator switches 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. 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. 0413470 is taken to have come into force on 9 December 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 Commonwealth Parliament, establishes a framework under which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs). These orders allow for reduced customs duty rates on specified goods, provided that no substitutable goods are produced in Australia. The Tariff Concession Instrument No. 0413470, made under this Act, was introduced to address the application by Invensys Appliance Controls for tariff concessions on certain energy regulator switches. Following the application, and after ensuring no substitutable goods were produced domestically, the CEO issued TCO No. 0413470, effective from 9 December 2004, which reduced the duty rate on these switches from the general 5% to 3%. This legislative action aimed to facilitate more cost-effective importation of these specific goods, potentially benefiting importers by allowing them to claim duty refunds on imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders can reduce the rate of customs duty on certain goods, subject to the criteria outlined in the Act. The application for a TCO must be lodged with the CEO, and the CEO will consider whether the goods in question meet the core criteria, particularly ensuring that no substitutable goods are being produced in Australia. If the application satisfies these conditions, the CEO must issue a written order specifying the reduced duty rate. Instrument No. 0413470, made on 11 February 2005, is an example of such an order, applying a reduced duty rate of 3% on specific energy regulator switches, down from the general rate of 5%. The TCO is effective from the date the application was lodged, and it does not affect any pre-existing rights or impose liabilities on anyone other than the Commonwealth. This scheme allows for the targeted reduction of customs duties to support certain industries or products, provided they meet the statutory criteria.
Key Provisions
The Customs Act 1901, under Part XVA, provides the legal framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (s 269F). These TCOs apply lower rates of customs duty to specific goods, provided certain criteria are met. The primary sections relevant to TCOs include section 269C, which outlines the core criteria for approving an application, and section 269P(3), which mandates the CEO to issue a written order if the criteria are satisfied. Specifically, section 269C requires that on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business, while section 269B defines key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'.
The obligations imposed by the Act on the CEO include assessing the validity of TCO applications based on the core criteria (s 269C). Once an application is accepted, the CEO must publish a notice in the Gazette inviting any objections (s 269K(1)). Furthermore, the CEO must ensure that any TCO issued does not disadvantage any person other than the Commonwealth and does not impose liabilities for actions taken before the TCO's effective date (s 269S(1)). In the case of TCO No. 0413470, the CEO was satisfied that the application for certain energy regulator switches met the core criteria, as no substitutable goods were produced in Australia, leading to the issuance of the TCO on 11 February 2005.
Breaches of the provisions under the Customs Act 1901 may lead to both civil and criminal consequences. For instance, under section 269SJ, any application for a TCO in respect of goods specified in this section is invalid. Non-compliance with the Act, including making false statements in an application or misuse of a TCO, could lead to penalties. The maximum penalties for such breaches can include fines up to the statutory maximum, as well as potential imprisonment depending on the severity of the offence. These penalties serve to ensure adherence to the Act's provisions and the integrity of the tariff concession scheme.