EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702852
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.
Binzel Ltd applied for a TCO in respect of certain plasma cutting machines parts on 19 December 2007.
Instrument
TCO No 0702852 was made on 7 March 2008. It declares that those certain plasma cutting machines parts 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. 0702852 is taken to have come into force on 19 December 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 was enacted by the Parliament of Australia to provide for the administration of customs and excise, including the imposition and collection of duties and taxes. The Tariff Concession Instrument No. 0702852, enacted in 2008, addresses the gap in the existing framework by allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide for a lower rate of customs duty on certain goods. This legislative instrument responds to applications such as the one made by Binzel Ltd for plasma cutting machine parts, which were determined to have no substitutable goods produced in Australia, thereby meeting the core criteria under the Act. The objective of this specific TCO is to facilitate trade by reducing the duty on these particular goods, ultimately benefiting importers who can apply for a refund of duty on goods imported since the effective date of the concession.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders provide for a lower rate of customs duty on specified goods, contingent upon certain conditions being met. An application for a TCO can be made by any person, provided the goods in question are not those explicitly excluded under section 269SJ of the Act. The CEO is mandated to assess whether the application meets the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business, as defined in sections 269D and 269E of the Act. If the application meets these criteria, the CEO is required to issue a TCO, which specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applicable to the goods. The TCO in question, No. 0702852, pertains to certain plasma cutting machine parts and came into effect on the date of application, 19 December 2007. The TCO does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, but importers of the specified goods may apply for a refund of duty from the date the TCO took effect.
Key Provisions
The Tariff Concession Instrument No. 0702852, made under the Customs Act 1901, pertains to a Tariff Concession Order (TCO) that reduces the customs duty on certain plasma cutting machines parts. The main operative sections involved include sections 269C, 269B, and 269P, which detail the criteria for a TCO application and the process by which the Chief Executive Officer of Customs (CEO) must assess and approve such applications (ss 269C, 269B, 269P). Once the CEO determines that the application meets the core criteria, a TCO is made, effectively declaring that the specified goods are subject to a lower rate of duty (s 269P(3)). For Binzel Ltd's application, the CEO found that no substitutable goods were produced in Australia, thus satisfying the core criteria, and consequently, the CEO made a written order that these plasma cutting machines parts are subject to a free duty rate (s 269P(3)).
Under this Act, the CEO has specific obligations when handling a TCO application. The CEO must ensure that the application does not pertain to goods specified in section 269SJ, which are ineligible for TCOs. If the application passes this initial check, the CEO must assess whether it meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not be made (s 269K(1)). If no submissions are received, the CEO must proceed to make the TCO if the application meets the criteria (s 269P(3)).
In terms of consequences, the Customs Act 1901 does not explicitly outline specific offences or penalties for breaches of the TCO provisions. However, any misuse or non-compliance with the terms of a TCO could potentially lead to broader legal consequences under other sections of the Customs Act or related legislation. For example, fraudulent claims for tariff concessions could result in penalties for misrepresentation or fraud under other sections of the Act. Moreover, while the Act ensures that the TCO does not disadvantage any person or impose liabilities for actions taken prior to the TCO's effective date (s 269S(1)), any subsequent improper use of the TCO might attract scrutiny or penalties under relevant trade laws.