EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0700572
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 air compressors on 11 January 2007.
Instrument
TCO No 0700572 was made on 10 April 2007. It declares that those certain air compressors 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. 0700572 is taken to have come into force on 11 January 2007.
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 Commonwealth Parliament, established a framework under which Tariff Concession Orders (TCOs) can be issued to provide reduced customs duty rates on certain goods. The Act aimed to address economic disparities and to support industries by allowing for tariff reductions where applicable. Specifically, the Tariff Concession Instrument No. 0700572, issued in 2007, was introduced to provide a zero percent duty rate on certain air compressors, as opposed to the general five percent duty, upon the application by Genelite Pty Ltd. This instrument was made under the authority of the Chief Executive Officer of Customs (CEO), who was required to ensure that the application met specific core criteria, such as the absence of substitutable goods produced in Australia. The instrument became effective from the date the application was lodged, 11 January 2007, and the CEO did not receive any submissions opposing the concession.
Scope and Application
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 legislative instrument applies to any person or entity seeking to reduce the customs duty on specific goods, provided that such goods are not listed in section 269SJ as those which cannot be subject to a TCO. The process involves an application to the CEO, who must ensure that the application meets core criteria, such as the absence of substitutable goods produced in Australia. Once a TCO is granted, it applies retroactively to the date of application, benefiting importers who can seek duty refunds for goods imported since that date. The TCO does not affect pre-existing rights or impose new liabilities on non-Commonwealth entities. The application and scope of TCOs may be further refined through subordinate instruments, ensuring the precise administration of tariff concessions.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 0700572 under the Customs Act 1901 (section 269C) allow the Chief Executive Officer of Customs (section 269P(3)) to make a Tariff Concession Order (TCO) if certain conditions are met. For example, the application for a TCO must meet the core criteria, which include the requirement that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The definitions of "goods produced in Australia", "ordinary course of business", and "substitutable goods" are found in sections 269D, 269E, and 269F respectively. If these criteria are satisfied, the CEO must issue a written order, specifying the lower rate of duty applicable to the goods in question (section 269P(3)). In this particular case, the TCO applies to certain air compressors, which are now subject to a duty rate of 0% instead of the general 5% rate (section 269S(1)).
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily centered around the application process and the decision-making process of the CEO. The applicant, in this case, Genelite Pty Ltd, must ensure that their application is valid and meets the core criteria. This involves providing sufficient information and evidence to demonstrate that no substitutable goods were produced in Australia on the day the application was lodged. The CEO, on the other hand, is required to review the application, make a decision based on the provided information, and issue a written order if the application meets the criteria. The CEO is also required to publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission (section 269K(1)). In this instance, the CEO did not receive any submissions in response to the invitation.
The Customs Act 1901 does not explicitly outline specific offences, penalties, or consequences for breach in relation to the issuance of TCOs. However, it is worth noting that 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 (section 269S(2)). This means that the TCO does not impose any liabilities on any person. Importers of the goods in question 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 (section 126(1)(r) of the Regulations).