EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602197
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.
Sun Metals Corporation Ltd applied for a TCO in respect of certain oxygen generator adsorber parts on 12 January 2006.
Instrument
TCO No 0602197 was made on 21 April 2006. It declares that those certain oxygen generator adsorber 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 10%. 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. 0602197 is taken to have come into force on 12 January 2006.
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 to provide a comprehensive framework for the regulation of customs and excise duties in Australia, and it includes provisions for the making of Tariff Concession Orders (TCOs). The Tariff Concession Instrument No. 0602197 was introduced by the Chief Executive Officer of Customs under section 269F of the Act to provide a concession on customs duty for certain oxygen generator adsorber parts. This was enacted to address the specific economic and market needs identified by Sun Metals Corporation Ltd, ensuring that such goods could be imported without incurring the general rate of duty, which stood at 10%, thus facilitating the availability of these critical components without financial barriers. The Australian Parliament authorised the CEO to make such orders, with the overarching policy objective being to support domestic industries by allowing the import of goods that are not produced domestically, thereby maintaining competitive market conditions and supporting broader economic objectives.
Scope and Application
The Customs Act 1901, as amended, allows for the creation of Tariff Concession Orders (TCOs) which can reduce the rate of customs duty on certain goods. Specifically, the Act applies to any person who can apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods that meet the core criteria set out in the legislation. These criteria include the condition that no substitutable goods are produced in Australia in the ordinary course of business. The application of a TCO is contingent on satisfying these criteria, which are further defined in the Act, including what constitutes substitutable goods and ordinary course of business. Once a TCO is issued, it applies from the date the application was lodged, meaning the tariff concession is retroactive to that date. The CEO must also publish a notice in the Gazette inviting any interested party to submit objections to the TCO, although no objections were received for TCO No. 0602197. The Act ensures that the issuance of a TCO does not adversely affect the rights of any person as at the date of registration, and similarly, it does not impose any liabilities on any person for actions taken before the TCO was registered.
Key Provisions
The main operative sections of this legislation, found in the Customs Act 1901, include section 269C (which defines the core criteria for a Tariff Concession Order (TCO) application), section 269F (which allows a person to apply for a TCO in respect of goods), and section 269P (which mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that an application meets the core criteria, they must make a written order declaring the goods subject to the TCO). Section 269SJ specifies the goods that cannot be subject to a TCO, while section 269D, section 269E, and section 269F define key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'.
The obligations and requirements imposed by this Act primarily concern the CEO's responsibility to assess TCO applications against the core criteria specified in section 269C. If the CEO determines that the application meets the criteria, they are required to issue a written TCO. This process also involves the CEO publishing a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be granted (subsection 269K(1)). Any submissions received must be considered before a decision is made. Additionally, the Act stipulates that a TCO comes into force on the day the application is lodged (subsection 269S(1)), and it does not affect the rights of any person as at the date of registration concerning anything done or omitted before that date (subsection 269S(2)).
In terms of potential consequences, the Act does not explicitly state any specific offences or penalties for non-compliance with the TCO provisions. However, the failure to comply with the requirements set out in the Act, such as improperly granting a TCO without satisfying the core criteria, could potentially lead to legal challenges or administrative actions. Given the nature of customs and tariff regulations, non-compliance could also result in financial liabilities for incorrect duty payments, and possible enforcement actions by customs authorities. The precise nature and severity of these consequences would depend on the specific circumstances and the relevant laws governing customs and tariffs.
The explanatory statement for Tariff Concession Instrument No. 0602197 clarifies that this particular TCO applies to certain oxygen generator adsorber parts, reducing the duty rate from 10% to free. The CEO was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria for the concession. This TCO, effective from 12 January 2006, allows importers to apply for a refund of duty on these goods imported since the TCO's effective date, without imposing any liabilities on non-Commonwealth persons.