EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618152
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.
Berendsen Fluid Power Pty Ltd applied for a TCO in respect of certain hydraulic hoses on 2 November 2006.
Instrument
TCO No 0618152 was made on 19 January 2007. It declares that those certain hydraulic hoses 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. 0618152 is taken to have come into force on 2 November 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. 0618152, enacted in 2007 under the Customs Act 1901, was introduced to address the need for tariff concessions on specific imported goods, in this case, certain hydraulic hoses, where no substitutable goods are produced in Australia. The instrument was developed to facilitate trade by lowering the customs duty rate on these goods, thereby making them more affordable for businesses and consumers. The Australian Parliament enacted this legislation to streamline the application process for tariff concessions, ensuring that the Chief Executive Officer of Customs can efficiently assess and approve applications that meet the core criteria. The policy objective behind this instrument is to foster a competitive market by allowing duty-free imports when no local production exists, thus supporting economic efficiency and consumer choice.
This instrument was introduced to ensure that businesses like Berendsen Fluid Power Pty Ltd could apply for and receive tariff concessions on goods that are not domestically produced. By reducing the customs duty on these specific hydraulic hoses from 5% to 0%, the instrument aims to alleviate some of the financial burdens on importers and encourage the importation of goods that are not locally manufactured. This approach aligns with broader trade policies that seek to balance economic interests with the need to support local industries where feasible. The instrument's enactment underscores the commitment to a transparent and fair process for tariff concession applications, ensuring that all interested parties have an opportunity to voice their concerns or objections.
Scope and Application
The Tariff Concession Instrument No. 0618152, established under the Customs Act 1901, applies specifically to the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This instrument is pertinent to any person or entity applying for a TCO in respect of goods that are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The application process is governed by section 269C, which mandates that a TCO application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The geographic reach of this Act is national, as it is a Commonwealth legislation, and it applies across Australia. The application of the Act may be extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995. In this instance, the instrument was made on 19 January 2007, following an application by Berendsen Fluid Power Pty Ltd for a TCO on certain hydraulic hoses, which was accepted due to the absence of substitutable goods produced in Australia. Consequently, these specific hydraulic hoses now attract a duty rate of 0% under item 50 of Schedule 4 to the Tariff, as opposed to the general rate of 5%.
Key Provisions
The Tariff Concession Instrument No. 0618152, as provided under the Customs Act 1901, outlines the process and criteria for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). When an application for a TCO is submitted under section 269F of the Act, the CEO must first ensure that the goods in question are not among those specified in section 269SJ, which cannot be subject to a TCO. If the application is deemed valid, the CEO assesses whether it meets the core criteria stipulated 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. If the application satisfies these conditions, the CEO must issue a written order declaring the goods to which the TCO applies, as outlined in section 269P(3).
Under this legislation, the CEO has specific obligations. The CEO must publish a notice in the Gazette once a TCO application is accepted as valid, inviting any interested parties to submit objections or submissions as to why the TCO should not be made, as required by subsection 269K(1) of the Act. Additionally, the CEO must ensure that the TCO does not adversely affect any person's rights or impose liabilities for actions taken prior to the TCO's registration, in accordance with subsection 269S(1). This ensures that the rights of importers are beneficially affected, as they can apply for a refund of duty on goods imported since the TCO's effective date.
The Act also includes provisions for potential breaches and consequences. While the Explanatory Statement does not detail specific offences or penalties related to the issuance or misuse of TCOs, breaches of the Customs Act 1901 or associated regulations could result in civil or criminal penalties. These penalties may include fines or imprisonment, depending on the severity and nature of the breach. However, the specific penalties would be governed by the broader Customs Act and its regulations, rather than the particular TCO in question.