EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604145
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.
Water Corporation applied for a TCO in respect of certain potabilisation plant on 21 February 2006.
Instrument
TCO No 0604145 was made on 5 May 2006. It declares that those certain potabilisation plant 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. 0604145 is taken to have come into force on 21 February 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, enacted by the Australian Parliament, provides a framework for the administration of customs and excise duties and includes provisions for Tariff Concession Orders (TCOs). The Act was introduced to streamline the process of applying for tariff concessions on imported goods, allowing for more flexible and responsive trade policies. The explanatory statement for Tariff Concession Instrument No. 0604145, made under the Customs Act 1901, addresses the application by Water Corporation for a TCO concerning certain potabilisation plant. The instrument, issued on 5 May 2006, was effective from 21 February 2006, the date the application was lodged. The policy objective was to ensure that the application was processed in accordance with the Act’s requirements, which include verifying that no substitutable goods were produced in Australia at the time of application. As a result, the instrument declared that the specified potabilisation plant are subject to a 0% duty rate, down from the general rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 0604145 under the Customs Act 1901 applies to the specific potabilisation plant goods for which Water Corporation made an application, and it is effective for the goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies. This Instrument facilitates a concession in customs duty for these goods, reducing the duty from the general rate of 5% to 0%. The application of this Instrument is contingent on the determination by the Chief Executive Officer of Customs that no substitutable goods were produced in Australia on the day the application was lodged, ensuring that the concession does not undermine domestic production. The Instrument extends to the Commonwealth jurisdiction and impacts importers by allowing them to apply for a refund of duty for goods imported since the date the Tariff Concession Order was lodged. It is noteworthy that this Instrument does not disadvantage any person other than the Commonwealth or impose any liabilities on any person in respect of actions taken prior to the order's registration.
Key Provisions
The key operative sections of this legislation are sections 269C, 269F, 269P, and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the application meets the core criteria set out in section 269C, the CEO must make a written order (a TCO) specifying that the goods are subject to a prescribed rate of customs duty. The TCO comes into force on the day the application was lodged (subsection 269S(1)).
The obligations and requirements imposed by the Act on the parties it governs include the necessity for the CEO to ensure that the application for a TCO does not relate to goods specified in section 269SJ, which are ineligible for TCOs. The CEO must also determine if the application meets the core criteria by verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). Furthermore, the CEO must publish a notice in the Gazette, inviting any interested parties to submit their views on the application (subsection 269K(1)). Once a TCO is made, it is important that the rights of the parties are protected as per subsection 269S(2), ensuring that the TCO does not affect any rights or impose liabilities in respect of actions taken before the TCO was lodged.
In terms of offences, penalties, or consequences for breach, the Customs Act 1901 does not explicitly outline specific criminal or civil penalties for failing to comply with the requirements of a TCO. However, the Act does provide for a range of penalties for breaches of the Customs Act and related regulations, which may include fines and imprisonment. For instance, section 231A of the Customs Act provides for a maximum penalty of 10,000 penalty units (approximately AUD 1.7 million) or imprisonment for five years, or both, for serious offences such as smuggling or false statements. Additionally, section 126 of the Customs Regulations 1995 provides for penalties for incorrect or misleading declarations, which may include fines or imprisonment.
The Tariff Concession Instrument No. 0604145 specifies a 0% rate of duty for certain potabilisation plant, which applies from the date the application was lodged (21 February 2006). The CEO must ensure that the application meets the core criteria and that no substitutable goods were produced in Australia in the ordinary course of business on the application date. Failure to comply with the Act’s requirements may result in significant penalties, although specific penalties for breaches related to TCOs are not explicitly stated in the legislation.