EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0516791
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.
Saake Australia applied for a TCO in respect of certain gas or oil filled ignitors on 12 December 2005.
Instrument
TCO No 0516791 was made on 03 March 2006. It declares that those certain gas or oil filled 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. 0516791 is taken to have come into force on 13 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 Customs Act 1901 was enacted by the Australian Parliament and provides a framework for the administration of customs and excise duties in Australia. The Customs Act 1901 includes provisions for Tariff Concession Orders (TCOs) under Part XVA, which enable the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain imported goods. This was introduced to address the need for a mechanism to provide tariff concessions for imported goods that are not produced domestically and for which there are no suitable domestic substitutes. Instrument No. 0516791, made under the authority of the Customs Act 1901, grants a tariff concession for certain gas or oil filled ignitors, reducing the duty from 5% to free. The policy objective is to encourage the import of these goods by making them more competitively priced in the Australian market, thereby benefiting consumers and potentially importers through duty refunds on previously imported goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs. This legislation applies to any individual or entity that seeks to import specific goods into Australia and may benefit from a reduced rate of customs duty. The scope of the Act extends to goods that are not produced in Australia in the ordinary course of business and for which no substitutable goods exist domestically. The application process requires the prospective beneficiary to lodge an application with the CEO, who then assesses whether the application meets the core criteria set out in the Act. If the CEO determines that no substitutable goods are produced in Australia, they are required to issue a TCO, which reduces the customs duty on the specified goods to zero. The TCO applies nationally and its effect is prospective, meaning it does not impact any rights or liabilities that existed prior to the date on which the TCO is registered. The Customs Tariff Act 1995 complements this legislation by providing the tariff schedule to which the goods are subject post-concession. The TCO does not extend to goods that are specified as ineligible under section 269SJ of the Customs Act 1901.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0516791 (section 269F and 269P(3) of the Customs Act 1901) establish the framework for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (section 269F). If the CEO is satisfied that the application for a TCO meets the core criteria, the CEO must issue a written order declaring that the goods in question are subject to a prescribed rate of duty (section 269P(3)). For instance, in the case of gas or oil filled ignitors, the CEO issued TCO No. 0516791, which applies to those specific goods and declares that they are to be treated under item 50 of Schedule 4 to the Tariff, with the duty rate set at free, as opposed to the general rate of 5%.
The Customs Act 1901 imposes obligations on both the applicant and the CEO. An applicant seeking a TCO must ensure that their application meets the core criteria, which includes demonstrating that no substitutable goods are produced in Australia (section 269C). The CEO, on the other hand, is required to assess the application against these criteria and, if satisfied, to issue a written order (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit their views on the proposed TCO (subsection 269K(1)). In this particular case, no submissions were received in response to the notice.
Failure to comply with the requirements of the Customs Act 1901 can lead to civil or criminal consequences. While the specific penalties for breach are not detailed in the Explanatory Statement, the Act generally provides for a range of penalties including fines and imprisonment for offences related to customs and excise. The Tariff Concession Instrument No. 0516791 does not impose any liabilities on any person and does not affect the rights of persons as at the date of registration. However, the rights of importers are beneficially affected as they may apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).