EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0608792
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.
Kroll Heaters Australia applied for a TCO in respect of certain air heater parts on 22 May 2006.
Instrument
TCO No 0608792 was made on 4 August 2006. It declares that those certain air heater 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 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. 0608792 is taken to have come into force on 22 May 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. 0608792 was enacted in 2006 under the Customs Act 1901 to address the need for tariff concessions on specific goods. This instrument was introduced to facilitate tariff concessions for certain air heater parts by Kroll Heaters Australia, reducing the customs duty from 5% to 0%. This change was made possible under the Customs Act 1901, which allows for Tariff Concession Orders (TCOs) to be issued by the Chief Executive Officer of Customs, provided the application meets the core criteria, which include the absence of substitutable goods produced in Australia. The Australian Parliament enacted this legislation to support businesses by reducing the cost of importing certain goods, thereby potentially boosting competitiveness and economic activity. The instrument came into force on the date the application was lodged, 22 May 2006, and did not affect the rights of any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0608792 under the Customs Act 1901 applies to the importation of certain air heater parts for which Kroll Heaters Australia submitted an application on 22 May 2006. The application process and subsequent approval by the Chief Executive Officer of Customs (CEO) are governed by the provisions of Part XVA of the Act, which outlines the criteria for Tariff Concession Orders (TCOs). Specifically, the Act allows for reduced customs duty rates on goods that are not substitutable by Australian-produced goods, as determined by the CEO. Upon determining that no substitutable goods were produced in Australia, the CEO issued a TCO on 4 August 2006, which declared that the air heater parts in question are subject to a 0% duty rate, down from the standard 5% rate. This concession is effective from the date of the application, 22 May 2006, without retroactive effect on the rights or liabilities of any party other than the Commonwealth.
The TCO applies nationally and is subject to the Commonwealth's jurisdiction, with no submissions received in opposition to the TCO during the published consultation period. The application and approval process adhere to the statutory requirements, ensuring that the TCO does not adversely affect existing rights or impose new liabilities on entities other than the Commonwealth. Importers of the specified goods can benefit from this concession by applying for duty refunds on imports made since the effective date of the TCO. The scope of the TCO is narrowly tailored to the specific goods mentioned and does not extend to other goods or industries unless similarly qualified under the Act's provisions.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0608792, made under the Customs Act 1901, pertain to the creation and effect of Tariff Concession Orders (TCOs). Section 269F allows individuals to apply to the Chief Executive Officer (CEO) of Customs for a TCO for specific goods. The CEO assesses these applications against the core criteria outlined in sections 269C and 269SJ, which concern the absence of substitutable goods produced in Australia and the ineligibility of certain goods for a TCO, respectively. If the application satisfies these criteria, the CEO must issue a TCO, as per section 269P(3), effectively reducing the customs duty on the specified goods, as illustrated by TCO No. 0608792, which lowered the duty on certain air heater parts from 5% to 0%.
Entities and individuals governed by this Act have specific obligations, including the duty to ensure that any application for a TCO complies with the stipulated criteria. The CEO of Customs is obligated to review applications promptly and publish notices in the Gazette, inviting public submissions on applications that are accepted as valid. In the case of TCO No. 0608792, Kroll Heaters Australia fulfilled its obligation by submitting an application, and the CEO followed through by issuing the TCO after confirming that no substitutable goods were produced in Australia at the time of application.
The Act imposes various consequences for non-compliance. Although the explanatory statement does not specify offences directly related to the issuance of TCOs, breaches of other sections of the Customs Act 1901 can lead to significant civil or criminal penalties. For instance, providing false information in an application could lead to penalties under sections related to false statements. The maximum penalties for such offences can vary widely depending on the severity of the breach, often including substantial fines and, in more severe cases, imprisonment. Importers who benefit from a TCO, such as those eligible for duty refunds under paragraph 126(1)(r) of the Regulations, must also ensure compliance with all other relevant provisions of the Act to avoid any potential liabilities.