EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0605043
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.
Sno Quip Pty Ltd applied for a TCO in respect of certain hydraulic control valves on 10 March 2006.
Instrument
TCO No 0605043 was made on 2 June 2006. It declares that those certain hydraulic control valves 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. 0605043 is taken to have come into force on 10 March 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, establishes a framework for the administration of customs and excise through various provisions including Tariff Concession Orders (TCOs). This legislation was introduced to address the need for tariff concessions on certain imported goods, providing relief to businesses that rely on such imports and ensuring that they are not at a competitive disadvantage. Under section 269F of the Act, the Chief Executive Officer of Customs can make a TCO to apply a lower rate of customs duty on goods if specific criteria are met, such as the absence of substitutable goods produced in Australia. The policy objective of the Act is to facilitate fair trade practices by reducing import costs for businesses, thereby supporting economic growth and competitiveness. The Tariff Concession Instrument No. 0605043, issued in 2006, exemplifies this process by granting a zero percent duty rate on certain hydraulic control valves, benefiting importers by lowering their duty obligations from the general rate of 5 percent.
Scope and Application
The Tariff Concession Instrument No. 0605043 applies to individuals and entities seeking a reduction in customs duty on specific goods under the Customs Act 1901. The scope of the Act is targeted at applications for tariff concession orders (TCOs) concerning goods that are not produced in Australia and do not have substitutable goods available domestically. The instrument applies to the geographic jurisdiction of Australia, operating under the national framework established by the Customs Act. The Act does not apply to goods specified in section 269SJ of the Act, which are ineligible for TCOs. The instrument extends its application through subordinate instruments by referencing sections of the Customs Act and the Customs Tariff Act 1995. Importantly, the TCO does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on persons other than the Commonwealth for actions taken before the TCO's effective date.
Key Provisions
The Customs Act 1901, under section 269F, allows for the application to the Chief Executive Officer of Customs (CEO) for Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. Section 269C outlines the core criteria for a TCO application to be valid, requiring that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, they are required, under section 269P(3), to make a written order declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on parties include ensuring that applications for TCOs are made in accordance with the Act's provisions and that they are not for goods specified in section 269SJ, which are ineligible for TCOs. The CEO must also publish a notice in the Gazette, as required by section 269K(1), inviting submissions from any interested parties before making a decision on the TCO application. In this instance, TCO No. 0605043 was made for certain hydraulic control valves, which now attract a 0% duty rate under item 50 of Schedule 4 of the Tariff, as the CEO determined that no substitutable goods were produced in Australia.
Any breaches of the requirements under the Customs Act 1901 may lead to civil or criminal penalties. For example, knowingly making a false statement in an application for a TCO, under section 284, can result in a civil penalty of up to $22,200 for individuals and $111,000 for bodies corporate. Additionally, under section 285, contraventions of the Act that are also offences under State or Territory law can result in criminal penalties, which can include fines and imprisonment. It is important for parties to ensure compliance with the Act to avoid these consequences.