EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702371
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.
Powereng Pty Limited applied for a TCO in respect of certain current and/or voltage instrument transformers on 14 February 2007.
Instrument
TCO No 0702371 was made on 09 May 2007. It declares that those certain current and/or voltage instrument transformers 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. 0702371 is taken to have come into force on 14 February 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 Tariff Concession Instrument No. 0702371 was introduced to address the need for tariff concessions on specific goods, in line with the Customs Act 1901. This instrument, enacted in 2007, facilitates the application of lower customs duties to certain goods through the creation of Tariff Concession Orders (TCOs). The Customs Act 1901, as amended, provides a framework for the CEO of Customs to assess and approve applications for TCOs, ensuring that the goods in question are not substitutable by products manufactured in Australia and meet the core criteria outlined in the Act. Powereng Pty Limited's application for a TCO on certain current and/or voltage instrument transformers was approved by the CEO on 9 May 2007, resulting in a duty-free status for these goods, which contrasts with the general rate of 5%. The legislation ensures that the TCO does not affect existing rights or impose new liabilities on individuals or entities, thereby protecting the rights of importers who may seek duty refunds for imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the customs duty on certain goods. This process applies to any person who can demonstrate that the goods for which they are seeking a concession are not substitutable by any goods produced in Australia in the ordinary course of business. This legislation has a Commonwealth reach, meaning it applies across Australia and is subject to the overarching provisions of the Customs Act. However, it is pertinent to note that goods specified in section 269SJ of the Act, which are those that cannot be subject to a TCO, are excluded from this concession. Subordinate instruments, such as the Customs Tariff Act 1995, further define the specifics of the concessions by detailing the items in the Tariff that may be altered by a TCO. In the instance of TCO No. 0702371, the CEO issued a concession for certain current and/or voltage instrument transformers, effectively setting their duty rate to free, provided no substitutable goods were produced in Australia. The order came into force on the date of the application, 14 February 2007, and importers of these goods can apply for a refund of duty from that date.
Key Provisions
The Customs Act 1901, under Part XVA, establishes a framework for Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs (CEO). A TCO allows for a lower rate of customs duty on specified goods, provided certain criteria are met. Section 269F allows any person to apply to the CEO for a TCO, with the CEO required to consider the application unless it pertains to goods listed in section 269SJ, which cannot be subject to a TCO. The CEO must then determine if the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged.
The obligations imposed by the Customs Act on parties applying for a TCO include ensuring that their application complies with the criteria set out in sections 269B, 269C, 269D, and 269E. These sections define terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." The CEO is also obligated to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as required by subsection 269K(1). Additionally, the TCO itself must be made in writing and specify the prescribed item of Schedule 4 to the Customs Tariff Act 1995 to which the goods apply, as stipulated in subsection 269P(3).
There are no specific offences, penalties, or civil/criminal consequences outlined in the explanatory statement for failing to comply with the provisions of a TCO or for making a false statement in an application. However, it is implied that any misuse of the TCO system or fraudulent application could potentially lead to legal action under other relevant sections of the Customs Act or other applicable laws. The statement does clarify that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration and does not impose any liabilities on any person.