EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0509808
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 Limited applied for a TCO in respect of certain steam generation boiler auxiliary plant parts on 25 July 2005.
Instrument
TCO No 0509808 was made on 21 October 2005. It declares that those certain steam generation boiler auxiliary plant 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. 0509808 is taken to have come into force on 25 July 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 Commonwealth Parliament, establishes a framework within which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This legislative instrument addresses the need to provide reduced customs duty rates for specific goods, enhancing economic efficiency and competitiveness for businesses importing these goods. The Act allows for a lower rate of customs duty to apply to goods subject to a TCO, provided that the application meets core criteria, including the non-existence of substitutable goods produced in Australia at the time of the application. The policy objective of this Act is to facilitate the importation of goods that are not domestically produced, thereby supporting industry competitiveness and potentially lowering costs for consumers.
In the case of TCO No. 0509808, made on 21 October 2005, certain steam generation boiler auxiliary plant parts were declared as goods to which a specified item in Schedule 4 of the Customs Tariff Act 1995 applies, granting them a duty-free status. This decision was based on the Chief Executive Officer of Customs being satisfied that no substitutable goods were produced in Australia at the time of the application. The order was published in the Gazette, inviting public submissions, though none were received. The concession came into effect on 25 July 2005, the date of the application, and it does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCO) that apply lower rates of customs duty to specific goods, provided certain criteria are met. The Act applies to persons or entities that seek to import goods for which a TCO can be applied, ensuring that these goods are not specified in section 269SJ, which lists goods ineligible for tariff concessions. The application process requires the CEO to verify that no substitutable goods are produced in Australia in the ordinary course of business. Once the core criteria are satisfied, the CEO issues a written TCO, which in this case, granted a tariff concession for certain steam generation boiler auxiliary plant parts, reducing the duty rate from 5% to free. The CEO is also required to publish a notice in the Gazette inviting submissions against the TCO, although none were received in this instance. The TCO does not affect existing rights or impose new liabilities, benefiting importers who can now claim refunds on duties paid on eligible goods since the effective date of the TCO.
Key Provisions
Section 269C of the Customs Act 1901 outlines the core criteria that must be met for a Tariff Concession Order (TCO) application to be considered. Specifically, on the day the application is lodged, there must be no substitutable goods produced in Australia in the ordinary course of business. A 'substitutable good' refers to any product manufactured in Australia that can be used in place of the goods for which the TCO is being applied (section 269D). If the Chief Executive Officer (CEO) of Customs is satisfied that these criteria are met, they are required to make a TCO (section 269P(3)).
The obligations under this legislation involve ensuring that any application for a TCO adheres to the stipulations in section 269C. The CEO must then evaluate whether the application meets the outlined criteria and, if so, issue a TCO that specifies the goods and the applicable tariff item. Furthermore, the CEO must publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not be granted (subsection 269K(1)). In this case, no submissions were received, and the TCO was subsequently issued.
In terms of legal consequences, section 269S(1) specifies that a TCO is effective from the date the application is lodged. The TCO does not retroactively affect any rights or impose liabilities on individuals, except as specified under section 126(1)(r) of the Regulations, where importers can apply for duty refunds on goods imported since the TCO's effective date. Any breach of the conditions under which a TCO is granted could potentially lead to civil or criminal penalties, although the specific penalties are not detailed in the explanatory statement. The general rate of duty for the goods under the TCO is set at free, whereas the general rate for similar goods not covered by a TCO is 5%.