EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617301
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.
Genelite Pty Ltd applied for a TCO in respect of certain diesel powered AC generators on 18 September 2006.
Instrument
TCO No 0617301 was made on 08 December 2006. It declares that those certain diesel powered AC generators 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. 0617301 is taken to have come into force on 18 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, enacted by the Australian Parliament, provides a framework for the administration of customs and excise through the imposition of tariffs, duties, and other financial charges on goods imported into Australia. This Act includes provisions for Tariff Concession Orders (TCOs) under Part XVA, which allow for the reduction or exemption of customs duty on specified goods. The problem or gap that this scheme addresses is the potential for disproportionate tariffs on goods for which no suitable Australian-made alternatives exist, thereby encouraging the use of imported goods. The policy objective is to facilitate the import of goods that are essential or beneficial to the Australian market, provided there are no substitutable domestic products. The explanatory statement for Tariff Concession Instrument No. 0617301, which was issued on 8 December 2006, outlines the process by which the Chief Executive Officer of Customs assessed and approved a Tariff Concession Order for certain diesel-powered AC generators, resulting in a reduction of duty from 5% to free.
Scope and Application
The Customs Act 1901, as amended, provides for the creation of Tariff Concession Orders (TCO) under its Part XVA, allowing for reduced customs duties on specified goods. This mechanism is applicable to entities or individuals who wish to import goods not currently produced in Australia, provided they meet specific criteria such as the absence of substitutable goods in the domestic market. The authority to grant a TCO lies with the Chief Executive Officer of Customs, who must determine whether the application for a TCO aligns with the core criteria outlined in the Act. Notably, the Act does not allow for TCOs on goods specified in section 269SJ, which includes certain restricted items. The geographic reach of this Act is national, as it operates under the purview of the Commonwealth. The application of the Act may be further extended or defined through subordinate instruments, which can specify additional conditions or details not covered in the primary legislation. The Tariff Concession Instrument No. 0617301 exemplifies this process, as it was enacted to provide tariff concessions on certain diesel-powered AC generators, resulting in a duty-free status for these goods under the Customs Tariff Act 1995.
Key Provisions
The main sections of this legislation relate to the process of applying for and receiving a Tariff Concession Order (TCO) under the Customs Act 1901. Specifically, section 269F allows an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO concerning certain goods. If the CEO determines that the application is valid and meets the core criteria (section 269C), a TCO will be issued, effectively reducing the customs duty on those goods. In this instance, section 269P(3) requires the CEO to make a written order if satisfied that the application meets the core criteria. In this case, the TCO has been issued for certain diesel powered AC generators, applying item 50 of Schedule 4 to the Customs Tariff Act 1995 and resulting in a duty rate of free, down from the general rate of 5%.
The obligations imposed on parties by this Act include the requirement for the CEO to assess whether an application for a TCO meets the core criteria and, if it does, to issue a written TCO. The Act also requires the CEO to publish a notice in the Gazette inviting any objections to the TCO. This ensures transparency and allows interested parties to voice their concerns. The CEO must consider these objections when deciding whether to issue the TCO.
The legislation outlines specific consequences for breaches. While the explanatory statement does not detail specific criminal or civil penalties, the act of circumventing the requirements for a TCO or submitting false information could potentially result in legal repercussions under other sections of the Customs Act 1901 or related legislation. For instance, providing false information to the CEO could be considered an offence under section 236 of the Customs Act, which carries a maximum penalty of 2,000 penalty units for individuals and 10,000 penalty units for bodies corporate, depending on the severity of the offence. The Act also ensures that the issuance of a TCO does not disadvantage existing rights or impose new liabilities on any person, safeguarding against retroactive application that could unfairly impact those who have already engaged in importing activities before the TCO was issued.