EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0512437
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 Ltd applied for a TCO in respect of certain flame detectors and ignitors on 23 December 2005.
Instrument
TCO No 0512437 was made on 17 March 2006. It declares that those certain flame detectors and ignitors 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. 0512437 is taken to have come into force on 23 December 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 Tariff Concession Instrument No. 0512437, enacted under the Customs Act 1901, addresses the need for the Chief Executive Officer of Customs (CEO) to provide tariff concessions for specific goods. This instrument was introduced to facilitate tariff reductions on goods where substitutable alternatives are not produced in Australia. The CEO was satisfied that the application from Hitachi Ltd for a tariff concession order (TCO) on certain flame detectors and ignitors met the core criteria, specifically that no substitutable goods were produced domestically, allowing for a zero duty rate on these items. The instrument aims to benefit importers by potentially allowing them to apply for a refund of duty on imported goods since the effective date of the TCO, while ensuring no liabilities are imposed on non-Commonwealth persons. The policy objective is to provide relief to businesses importing these goods by reducing their customs duty burden.
Scope and Application
The Tariff Concession Instrument No. 0512437, under the Customs Act 1901, applies specifically to the goods for which a Tariff Concession Order (TCO) has been made, in this case, certain flame detectors and ignitors applied for by Hitachi Ltd. The Act allows for the CEO of Customs to issue TCOs that lower the rate of customs duty on goods, provided that the application meets the core criteria and no substitutable goods are produced in Australia. The TCO's geographic reach is national, affecting all importers of the specified goods within Australia. The instrument is designed to exempt these particular goods from the standard 5% duty rate, setting it to free, thereby benefiting the importers. The TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on anyone. The CEO must also consult by publishing a notice in the Gazette inviting any person to lodge a submission if they consider the TCO should not be made, although in this instance, no submissions were received. The commencement of the TCO is effective from the date the application was lodged, in this case, 23 December 2005.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 0512437 pertain to the application and approval process for Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). Specifically, 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. This requirement is contingent upon the definition of "substitutable goods" as provided in section 269D, "ordinary course of business" as per section 269E, and "goods produced in Australia" as defined in section 269D. Once the Chief Executive Officer of Customs (CEO) determines that the application meets these criteria, a written order declaring the goods subject to the TCO must be made under section 269P(3).
Entities such as Hitachi Ltd, who apply for a TCO, must ensure that their application meets the core criteria. The CEO is obligated to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In this case, the CEO did not receive any submissions. Upon satisfying the core criteria, the CEO must issue the TCO, which, as in the case of TCO No. 0512437, declares that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with the rate of duty for these goods being free.
The obligations imposed on the parties governed by the Act include the requirement for the CEO to rigorously assess whether the core criteria are met before issuing a TCO. The CEO must also ensure that the application is published in the Gazette and invite any potential objections, which were none in this instance. Importers of the goods subject to the TCO are entitled to apply for a refund of duty on goods imported since the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.
Regarding penalties and consequences for breach, the Act does not explicitly outline specific penalties for failing to comply with the requirements of a TCO. However, any breach of customs regulations, including those related to tariff concessions, could potentially lead to enforcement actions by Customs, including fines and other administrative penalties. The exact penalties would depend on the nature and severity of the breach, as well as other applicable laws and regulations.