EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617003
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.
TDU Pty Ltd applied for a TCO in respect of certain air cooled chillers on 11 September 2006.
Instrument
TCO No 0617003 was made on 01 December 2006. It declares that those certain air cooled chillers 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. 0617003 is taken to have come into force on 11 September 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, through its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act was enacted to provide a mechanism for reducing customs duty on specific goods, provided certain criteria are met. The policy objective is to facilitate trade by lowering the duty on goods that are not produced in Australia and do not have substitutable goods domestically available. The Tariff Concession Instrument No. 0617003, made in 2006, addresses the specific application by TDU Pty Ltd for tariff concessions on certain air-cooled chillers, resulting in a duty-free status for these goods, effective from the date of application. The instrument was enacted to ensure that no person other than the Commonwealth is disadvantaged or incurs additional liabilities due to the concessions.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the process of applying for Tariff Concession Orders (TCO) which reduce the rate of customs duty on certain goods. This Act applies to any individual or entity wishing to apply for a tariff concession on goods that meet specific criteria, ensuring that no substitutable goods are produced in Australia. The scope of the Act extends to the geographic jurisdiction of Australia, including all states and territories, and is managed by the Chief Executive Officer of Customs. The application process requires that the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, a TCO is issued, reducing the duty rate for the specified goods to zero. The Act also mandates that the CEO publish a notice in the Gazette inviting public submissions on the proposed TCO, although no submissions were received in this case. The commencement of the TCO is retroactive to the date of application, thereby protecting the rights of the applicant and ensuring no liabilities are imposed on third parties prior to the registration of the TCO.
Key Provisions
The primary sections of the Customs Act 1901, as outlined in Tariff Concession Instrument No. 0617003, focus on the process and requirements for establishing a Tariff Concession Order (TCO). Under section 269F, any person can apply to the Chief Executive Officer of Customs (the CEO) for a TCO regarding certain goods. Section 269C specifies that for a TCO application to be considered, no substitutable goods can be produced in Australia on the day the application is lodged. This core criterion is vital as it ensures that the concession is only granted when no suitable Australian-made alternatives exist. If the CEO is satisfied that the application meets these criteria, as per section 269P(3), a written TCO is issued, specifying the applicable tariff item from Schedule 4 of the Customs Tariff Act 1995. In this case, the TCO No. 0617003 pertains to certain air-cooled chillers, reducing their duty from 5% to free.
The Act imposes specific obligations on the parties involved. The CEO must ensure that any TCO application is thoroughly assessed to confirm that no substitutable goods are being produced in Australia at the time of application. As per section 269K(1), the CEO is also required to publish a notice in the Gazette inviting submissions from any interested parties who might oppose the granting of a TCO. This transparency ensures that all stakeholders have the opportunity to voice their concerns. Furthermore, the CEO must consider these submissions and make a decision based on the merits of the application and the feedback received.
Failure to comply with the requirements set out in the Customs Act 1901 can result in significant consequences. While the Act does not explicitly detail specific offences or penalties for breaching TCO regulations, general provisions under the Act could lead to fines or other penalties for non-compliance. Additionally, any misrepresentation or fraudulent application for a TCO could attract criminal penalties under broader customs laws, potentially including imprisonment. The severity of these penalties underscores the importance of adhering to the prescribed processes and criteria for issuing TCOs.