EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606834
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.
Actron Engineering Pty Ltd applied for a TCO in respect of certain axial fans on 11 April 2006.
Instrument
TCO No 0606834 was made on 30 June 2006. It declares that those certain axial fans 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. 0606834 is taken to have come into force on 11 April 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 under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders offer a lower rate of customs duty on specified goods, subject to certain conditions. The Act was amended to include the provisions for TCOs to address the gap in tariff relief for goods that are not produced domestically and do not have substitutable alternatives in Australia. The explanatory statement for Tariff Concession Instrument No. 0606834 clarifies that this specific TCO was introduced following an application by Actron Engineering Pty Ltd for certain axial fans, with the objective of ensuring that the relevant goods, which have a general duty rate of 5%, are subject to a free rate of duty as there are no substitutable goods produced in Australia. The instrument was effective from the date the application was lodged, 11 April 2006, and no submissions were received in opposition to the TCO.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to goods specified in the application, provided that the application meets certain criteria outlined in the Act. The application process involves the CEO evaluating whether the goods in question are not substitutable with any goods produced in Australia in the ordinary course of business. If the CEO determines that the application meets the core criteria, they are required to make a written order that reduces the customs duty on the specified goods. The scope of the TCO is limited to goods that are not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The application and subsequent order do not retroactively affect the rights of any person, except the Commonwealth, ensuring that no one is disadvantaged or imposed with liabilities for actions taken before the TCO's effective date.
The TCO No. 0606834, made in response to an application by Actron Engineering Pty Ltd, is an example of this process. This particular order applies to certain axial fans and specifies that they are subject to a zero rate of duty as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from the date the application was lodged. The CEO's decision to make this order was based on the absence of substitutable goods produced in Australia. Importers of these goods can benefit from this concession by applying for a refund of duty on goods imported since the effective date of the TCO. This order exemplifies the application of the Act in providing tariff concessions to promote specific economic activities by reducing the duty on particular imported goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0606834 (the Instrument) under the Customs Act 1901 (the Act) are sections 269C, 269B, 269E, 269D, and 269P(3) which establish the criteria for the issuance of a Tariff Concession Order (TCO). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO, and section 269SJ specifies the goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, such as the absence of substitutable goods produced in Australia, a TCO can be issued under section 269C. The CEO must then declare in a written order that the goods specified in the TCO application are subject to a prescribed rate of customs duty as outlined in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties governed by it include the requirement for applicants to ensure that their applications for a TCO meet the core criteria outlined in section 269C. This involves demonstrating that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is obligated to review these applications and make a decision based on the evidence provided. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties once an application is accepted as valid, as stipulated in subsection 269K(1). The CEO also has the responsibility to ensure that the TCO does not disadvantage any person or impose liabilities in respect of actions taken before the TCO's effective date.
In terms of consequences for breach, the Act does not explicitly state any offences or penalties for failing to comply with the provisions of a TCO. However, the broader framework of the Customs Act 1901 may impose penalties for non-compliance with customs regulations. Such penalties can include fines or imprisonment for breaches of customs laws, though specific penalties would depend on the nature and severity of the breach. It is also important to note that the TCO does not affect the rights of any person as at the date of registration, ensuring that no one is disadvantaged or incurs liabilities for actions taken before the TCO's effective date.