EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0507518
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.
Snowy Hydro Ltd applied for a TCO in respect of certain Hydro Electric Turbine Parts on 17 June 2005.
Instrument
TCO No 0507518 was made on 2 September 2005. It declares that those certain Hydro Electric Turbine 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 0%.
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. 0507518 is taken to have come into force on 17 June 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, was designed to facilitate international trade and streamline the customs process by establishing a framework for tariff concessions. The Act introduced a mechanism whereby the Chief Executive Officer of Customs could make Tariff Concession Orders (TCOs) to provide reduced customs duty rates for certain goods. This was aimed at addressing the issue of ensuring that Australian industries remain competitive without being unduly burdened by high customs duties on imported goods, particularly when no equivalent goods are produced domestically. Instrument No. 0507518, made on 2 September 2005, is an example of such a concession, providing Snowy Hydro Ltd with a zero percent duty rate on specific Hydro Electric Turbine Parts, effectively reducing the general rate of duty from 5% to 0%. The policy objective behind this legislation is to support domestic industries by ensuring that they are not placed at a disadvantage due to import duties, while also promoting economic efficiency through the facilitation of trade.
Scope and Application
The Tariff Concession Instrument No. 0507518 is an application of the Customs Act 1901, specifically under Part XVA, which allows for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to entities or individuals seeking tariff concessions for goods that are not currently produced in Australia in the ordinary course of business and that have no substitutable goods available domestically. The geographic scope of this Act is national, as it pertains to goods entering Australia and is governed by the Commonwealth. The application process involves an applicant lodging a request with the CEO, who then assesses the application against the core criteria specified in the Act, including the non-existence of substitutable goods produced in Australia. Once the CEO is satisfied that the application meets these criteria, they issue a TCO, which in this case, pertains to Hydro Electric Turbine Parts, reducing the duty from 5% to 0%. The TCO’s commencement date aligns with the application date, ensuring that any duties incurred prior to the order's effective date remain unaffected. This instrument extends the application of the Customs Act by providing a mechanism for tariff concessions on specific imported goods, thereby directly impacting the importation process and duty obligations for those goods.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269S. These sections provide the framework under which the Chief Executive Officer of Customs (CEO) can make a TCO, which applies a lower rate of customs duty to certain goods. Specifically, section 269F allows a person to apply for a TCO in respect of goods, while section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Section 269P mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods subject to a prescribed rate of duty specified in the TCO.
The Act imposes several obligations on the parties involved. The CEO must ensure that any TCO application is not in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as per subsection 269K(1). If no submissions are received, the CEO proceeds to make the TCO. The CEO is also responsible for declaring the goods subject to a lower rate of customs duty once satisfied that the core criteria are met, as per section 269P.
Breach of the provisions of the Customs Act 1901 can result in both civil and criminal consequences. For instance, knowingly importing goods that do not qualify for a TCO or falsely claiming a tariff concession could lead to penalties. Under the Customs Act, penalties for fraudulent activities can include fines of up to $22,200 or imprisonment for up to two years, or both. Additionally, section 126 of the Customs Regulations 1993 provides for the imposition of penalties for incorrect declarations or non-compliance with the Act, with penalties varying based on the severity and intent of the breach.