EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0509996
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 Circuit Breakers on 29 July 2005.
Instrument
TCO No 0509996 was made on 21 October 2005. It declares that those certain Circuit Breakers 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. 0509996 is taken to have come into force on 29 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 Australian Parliament, established a framework for the regulation of customs duties and tariffs. To address specific trade-related issues, the Act allows for the creation of Tariff Concession Orders (TCOs), which provide reduced customs duty rates for certain goods under particular circumstances. This scheme was introduced to ensure fair trade practices by allowing for tariff concessions where appropriate, thus encouraging trade while also protecting local industries from unfair competition. Instrument No. 0509996, made under the Customs Act 1901, was introduced in response to an application by Snowy Hydro Ltd for a TCO on certain Circuit Breakers. The instrument declared that these specific Circuit Breakers are subject to a zero percent duty rate, effective from the date the application was lodged, 29 July 2005. The decision to grant this concession was based on the finding that no substitutable goods were produced in Australia at the time of the application. This measure is expected to benefit importers by potentially allowing them to apply for duty refunds on imports of these goods since the effective date of the concession.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), providing reduced customs duty rates for specified goods. This scheme applies to individuals or entities that meet the core criteria set out in the Act, specifically if the goods for which a TCO is sought are not substitutable by goods produced in Australia. Snowy Hydro Ltd’s application for a TCO on certain Circuit Breakers was approved on 21 October 2005, leading to a reduction in the duty rate from 5% to 0%. This instrument applies nationally across Australia and does not disadvantage any person in respect of anything done before the date of registration, while benefiting importers who can apply for a refund of duty on goods imported since the effective date of the TCO. The application process includes a publication in the Gazette inviting submissions from interested parties, though in this case, none were received.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0509996 (TCO No. 0509996) under the Customs Act 1901 (section 269F) permit the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) that lower the customs duty rate on specific goods. Specifically, section 269C requires that the CEO must make a TCO if the application meets the core criteria, which includes the condition that no substitutable goods were produced in Australia on the day the application was lodged (section 269P(3)). In this case, TCO No. 0509996, made on 21 October 2005, applies to certain Circuit Breakers, declaring that these goods are subject to a 0% duty rate instead of the general 5% rate, as the CEO was satisfied that no substitutable goods were produced in Australia.
The Act imposes certain obligations on the parties involved, particularly on the CEO. The CEO must ensure that any TCO application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO. Furthermore, the CEO must determine whether the application meets the core criteria by verifying that no substitutable goods were produced in Australia on the application date (section 269C). Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. In this instance, the CEO did not receive any submissions.
Any breach of the provisions under the Customs Act 1901 may result in civil or criminal consequences. While the explanatory statement does not specify penalties for non-compliance with TCO provisions, general provisions under the Customs Act may include fines or imprisonment for serious breaches. The CEO's failure to adhere to the stipulated procedures, such as neglecting to publish a notice in the Gazette or making a TCO without meeting the core criteria, could lead to legal repercussions. Furthermore, any misuse of the tariff concessions by the applicant or subsequent importers could also attract penalties under the Customs Act.