EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0605441
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.
Welding Industries applied for a TCO in respect of certain welder parts on 15 March 2006.
Instrument
TCO No 0605441 was made on 26 May 2006. It declares that those certain welder 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 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. 0605441 is taken to have come into force on 15 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 Tariff Concession Instrument No. 0605441, enacted under the Customs Act 1901, was introduced to address the issue of providing tariff concessions on certain goods to support Australian industries and businesses. This instrument was developed in response to applications such as the one submitted by Welding Industries for tariff concessions on specific welder parts. The problem it aimed to address was the potential for higher customs duties to hinder the competitiveness of Australian businesses in the global market, particularly by allowing lower rates of customs duty for goods not produced domestically or not readily available in Australia.
This instrument was enacted by the Chief Executive Officer of Customs, who, under section 269F of the Customs Act 1901, is authorised to make Tariff Concession Orders (TCOs) if certain criteria are met. The policy objective, as outlined in the explanatory statement, is to ensure that Australian industries and businesses are not unduly disadvantaged by high customs duties on goods that could be sourced locally or internationally. The TCO provides a mechanism for the CEO to make written orders that effectively reduce or eliminate customs duties on specified goods, thereby encouraging their importation and use in Australia.
Scope and Application
The Tariff Concession Instrument No. 0605441 applies to individuals or entities seeking tariff concessions for specific goods, namely certain welder parts, under the Customs Act 1901. This instrument facilitates the process by which the Chief Executive Officer of Customs may grant a Tariff Concession Order (TCO) that reduces the duty rate on specified goods to zero, provided that no substitutable goods are produced in Australia. The application of this Act is federal in nature, operating under the Commonwealth's legislative authority. The scope of this legislation extends to any person or entity that applies for a TCO and benefits from the reduced duty rate, as long as the core criteria set out in the Act are met. The TCO does not apply to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for tariff concessions. The instrument's application is further defined and potentially expanded through subordinate instruments, which may include regulations or further orders made under the authority of the Customs Act 1901.
Key Provisions
The Tariff Concession Instrument No. 0605441, under the Customs Act 1901, primarily focuses on providing tariff concessions for certain goods, in this case, welder parts. According to section 269F, an application can be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) for goods. If the CEO determines that the application meets the core criteria as outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, a TCO can be issued. This specific TCO, No. 0605441, was made on 26 May 2006 and declared that the welder parts in question were subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, effectively reducing the duty rate from 5% to free.
The obligations imposed by the Customs Act 1901 on parties and entities governed by it are primarily related to the application process and compliance with the terms of any issued TCO. For applicants, such as Welding Industries in this case, the obligation is to ensure that their application meets the core criteria and to provide all necessary information to the CEO. The CEO, on the other hand, must review the application, assess whether it meets the core criteria, and if so, issue a TCO. Additionally, the CEO must publish a notice in the Gazette, as stipulated in section 269K, inviting any interested parties to submit objections if they believe the TCO should not be made.
Should any party fail to comply with the provisions of the Customs Act 1901 or the terms of a TCO, there can be significant consequences. The Act does not explicitly state civil or criminal penalties for non-compliance with TCOs, but breaches of customs regulations generally can lead to enforcement actions, fines, or other penalties under the Customs Act and related regulations. For example, under section 203 of the Customs Act, the CEO can take measures to recover unpaid duty and interest, and in more severe cases, there could be criminal penalties imposed, such as fines or imprisonment. The specific consequences would depend on the nature and severity of the breach.