EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703038
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.
Voith Turbo Pty Ltd applied for a TCO in respect of certain turbo fluid couplings on 26 February 2007.
Instrument
TCO No 0703038 was made on 18 May 2007. It declares that those certain turbo fluid couplings 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. 0703038 is taken to have come into force on 26 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. 0703038, enacted in 2007 under the Customs Act 1901, addresses the need for tariff concessions for specific goods to promote fair trade practices and economic efficiency. This instrument was introduced by the Chief Executive Officer of Customs, in accordance with section 269F of the Customs Act, which allows for the application of tariff concessions for goods not specified in section 269SJ of the Act. The policy objective, as outlined in the explanatory statement, is to ensure that tariff concessions are granted when no substitutable goods are produced in Australia, thereby protecting Australian industries from unfair competition and supporting the economic interests of businesses involved in the import and export of these goods.
The instrument was enacted following an application by Voith Turbo Pty Ltd for a tariff concession on certain turbo fluid couplings. The CEO of Customs determined that no substitutable goods were produced in Australia for these specific items, thus satisfying the core criteria set out in section 269C of the Customs Act. Consequently, the CEO issued Tariff Concession Order No. 0703038, effective from 26 February 2007, reducing the duty rate from 5% to free for these goods. The rights of importers are protected, and they can apply for a refund of duty paid on imports since the effective date of the concession. This instrument underscores the legislative intent to facilitate smoother trade operations and support industry competitiveness.
Scope and Application
The Tariff Concession Instrument No. 0703038 under the Customs Act 1901 applies to the specific goods, in this case, certain turbo fluid couplings, that are the subject of a Tariff Concession Order (TCO). This applies to Voith Turbo Pty Ltd, the applicant, and any other entities importing similar goods that meet the criteria of the TCO. The instrument facilitates the reduction or exemption of customs duty on these goods, which is a critical aspect of international trade and commerce for businesses engaged in the importation of such items. The geographic reach of this legislation is national, as it pertains to the importation of goods into Australia and is governed by the Commonwealth. However, the Act excludes goods specified in section 269SJ, which are ineligible for a TCO, thereby delineating the scope of its application. The CEO of Customs is mandated to make a TCO if certain core criteria are met, as outlined in section 269C, and the instrument can be further extended or modified through subordinate instruments, ensuring flexibility and adaptability to changing trade circumstances.
Key Provisions
The primary operative sections of this legislation include sections 269C, 269B, 269E, and 269P(3) of the Customs Act 1901. Section 269C details the core criteria that a Tariff Concession Order (TCO) application must meet. Specifically, the application must concern goods for which no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (s 269C). Section 269B defines terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," which are crucial for determining the eligibility of goods for a TCO (s 269B). Section 269E further elaborates on what constitutes the "ordinary course of business," ensuring clarity on this aspect. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that an application meets these core criteria, they must issue a written order declaring the goods subject to a TCO (s 269P(3)).
The obligations and requirements imposed by this legislation are primarily on the CEO of Customs and the applicants for TCOs. The CEO must ensure that any TCO application is valid and meets the core criteria specified in section 269C of the Act. This involves verifying that no substitutable goods were produced in Australia on the date the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made (s 269K(1)). If no objections are received, the CEO must proceed to issue the TCO as per section 269P(3). Applicants for TCOs must ensure their applications are complete and accurately reflect the eligibility of the goods for the concession, based on the definitions and criteria outlined in the Act.
For breaches of the provisions within this legislation, the Customs Act 1901 and the Customs Tariff Act 1995 may impose both civil and criminal consequences. The exact nature and severity of penalties depend on the specific breach. For instance, providing false information in a TCO application could result in civil penalties such as fines or, in more severe cases, criminal penalties including imprisonment. However, the specific maximum penalties are not detailed in the explanatory statement provided. Generally, penalties for breaches of customs legislation can include substantial fines and, in cases of deliberate or repeated breaches, imprisonment. These penalties serve as deterrents to ensure compliance with the regulations governing the issuance and application of TCOs.