EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0501206
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.
Orica Australia Pty Ltd applied for a TCO in respect of a certain water treatment plant on 24 January 2005.
Instrument
TCO No 0501206 was made on 20 June 2005. It declares that those certain water treatment plants 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. One submission objecting to the TCO application was received from United KG (formerly Thames Water Projects Pty Ltd).
Further, subsection 269M(1) of the Act provides that if the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO. The CEO invited Vivendi Water Systems Australia P/L, Yeomans Engineering Pty Ltd, Sardik Engineering Pty Ltd and Thames Water Projects Australia P/L to lodge written submissions.
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. 0501206 is taken to have come into force on 24 January 2005.
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, provides a framework for the administration of customs and excise duties, including a scheme for Tariff Concession Orders (TCOs). The Tariff Concession Instrument No. 0501206, introduced on 20 June 2005, addresses the problem of providing tariff concessions for specific goods, thereby facilitating their importation and use in Australia. The instrument allows for a lower rate of customs duty to apply to goods that meet certain criteria, ensuring that such goods are not produced domestically in the ordinary course of business. This measure aims to enhance economic efficiency and competitiveness by reducing the cost of importing critical goods, ultimately benefiting importers and potentially supporting broader economic objectives.
The instrument was developed following an application by Orica Australia Pty Ltd for a tariff concession on certain water treatment plants. After considering submissions from interested parties, including objections from United KG, the Chief Executive Officer of Customs determined that the application met the core criteria. The tariff concession order, which came into effect on 24 January 2005, declares that the specified water treatment plants are subject to a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, rather than the general rate of 5%. This legislative action ensures that the rights of importers are protected and potentially advantageous, while avoiding any imposition of liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, as amended, facilitates the establishment of Tariff Concession Orders (TCO) to provide reduced customs duty rates on specific goods. This legislation applies to any person or entity seeking to import goods into Australia that are not produced domestically and are not of a type excluded by section 269SJ of the Act. The application process for a TCO is overseen by the Chief Executive Officer of Customs, who must ensure that the application meets the core criteria specified in section 269C of the Act, namely that no substitutable goods are produced in Australia in the ordinary course of business. The scope of the Act is national, as it applies to all entities and individuals importing goods into Australia. However, the Act allows for the exclusion of certain goods from tariff concessions through subordinate instruments, ensuring that the concessions do not apply to products that could potentially undermine domestic industries. The TCO No. 0501206, which applies to a certain water treatment plant, exemplifies the Act's application by granting a free duty rate on these goods, effective from the date of the application, 24 January 2005. This TCO does not affect the rights of any person prior to its registration and allows for the potential refund of duties for importers of these goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0501206 under the Customs Act 1901 (sections 269C, 269P(3), and 269S) provide the framework for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269C requires that a TCO application meets core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied the application meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively applying a tariff concession. The instrument itself, TCO No. 0501206, declares that certain water treatment plants are subject to a 5% duty rate, which is reduced to free under the concession.
The Act imposes certain obligations on both the CEO and the applicants for TCOs. The CEO is obligated to assess whether an application meets the core criteria outlined in section 269C, and if so, to make a written order as per section 269P(3). The CEO must also publish notices in the Gazette inviting submissions from interested parties as per sections 269K(1) and 269M(1). Applicants, such as Orica Australia Pty Ltd in this case, must ensure their applications are valid and meet the criteria specified in section 269C. Additionally, any person who considers a TCO should not be made is required to lodge a submission with the CEO if they object to the application.
The Act does not explicitly outline specific offences or penalties for breaches within the TCO framework itself, but general compliance with the Customs Act 1901 is crucial. Failure to comply with the provisions of the Act, including the submission of false information in an application, could lead to civil or criminal penalties as outlined in other sections of the Act. For example, providing false information could result in fines or imprisonment as per the general penalties for false statements in the Customs Act. The specific consequences for non-compliance would depend on the nature and severity of the breach.