EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618988
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.
Hester Holdings Pty Ltd applied for a TCO in respect of certain spray cooling tanks on 28 November 2006.
Instrument
TCO No 0618988 was made on 2 March 2007. It declares that those certain spray cooling tanks 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. 0618988 is taken to have come into force on 28 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. 0618988 was enacted in 2007 under the Customs Act 1901. This legislation was introduced to provide a lower rate of customs duty on certain goods, specifically spray cooling tanks, which were the subject of an application by Hester Holdings Pty Ltd. The Tariff Concession Orders (TCOs) outlined in the instrument were made by the Chief Executive Officer of Customs (CEO) in accordance with the provisions of the Customs Act. The CEO determined that these spray cooling tanks were eligible for a zero percent duty rate, rather than the standard five percent, as no substitutable goods were being produced in Australia at the time of the application.
The instrument was created to address a specific need articulated by Hester Holdings Pty Ltd and to ensure that the application process was transparent and inclusive. As part of the process, the CEO published a notice in the Gazette inviting submissions from any person who believed that the TCO should not be made, although no submissions were received. The TCO came into effect on the date the application was lodged, 28 November 2006, and it did not affect any pre-existing rights or impose any liabilities on individuals. Instead, it provided a beneficial impact on importers who could apply for a refund of duty on goods imported since the effective date of the TCO.
Scope and Application
The Tariff Concession Instrument No. 0618988 applies to the specific goods, in this case certain spray cooling tanks, that are the subject of the instrument, and to the applicant, Hester Holdings Pty Ltd. The Act under which this instrument was made, the Customs Act 1901, allows for the application of lower rates of customs duty on goods specified in a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs. This legislation is applicable nationally across Australia as it falls under the Commonwealth jurisdiction. The TCO is effective from the date the application was lodged, in this instance, 28 November 2006. Importantly, the TCO does not retroactively affect the rights or impose liabilities on any person other than the Commonwealth in relation to activities occurring before the instrument's effective date. Instead, it allows for the potential refund of duties paid on the specified goods imported since the TCO's effective date. The scope of the TCO is defined by the Customs Act 1901, and its application may be extended or restricted through subordinate instruments, although in this instance, no such extensions or restrictions are noted.
Key Provisions
The main sections of the Tariff Concession Instrument No. 0618988, made under the Customs Act 1901, involve the process by which the Chief Executive Officer (CEO) of Customs decides whether to grant a Tariff Concession Order (TCO). Specifically, section 269F allows for applications to be made by any person for a TCO in respect of particular goods. Section 269C and section 269P(3) outline the criteria that must be met for the CEO to approve an application, with the key condition being that no substitutable goods were produced in Australia on the day the application was lodged. If these criteria are met, section 269P(3) mandates that the CEO must issue a written order granting the TCO. This instrument, TCO No. 0618988, was made on 2 March 2007, and it applies a zero percent duty rate to certain spray cooling tanks, which otherwise carry a general rate of 5 percent under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by this Act on the parties involved are primarily on the CEO of Customs. Upon receiving an application for a TCO, the CEO must ensure the application meets the criteria outlined in the Act. This involves verifying that no substitutable goods were produced in Australia on the application date and making a written order if the criteria are satisfied. The Act also requires the CEO to publish a notice in the Gazette inviting submissions from any person who may object to the TCO. In this case, no objections were received. Additionally, the Act ensures that the rights of any person, other than the Commonwealth, are not adversely affected by the TCO concerning actions taken before the date of registration.
In terms of potential offences and penalties, the Act does not explicitly outline specific criminal or civil penalties for breaches related to TCOs. However, any misuse or fraudulent application for a TCO could potentially lead to legal action under other relevant sections of the Customs Act 1901, which may include fines or imprisonment. The Act ensures that the TCO does not impose any liabilities on any person except the Commonwealth, thereby protecting non-governmental entities from any negative impacts arising from the concession.