EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703433
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.
Process Group Pty Ltd applied for a TCO in respect of certain electric immersion heaters on 02 March 2007.
Instrument
TCO No 0703433 was made on 25 May 2007. It declares that those certain electric immersion heaters 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. 0703433 is taken to have come into force on 02 March 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. 0703433, introduced under the Customs Act 1901, addresses the need for tariff concessions on specific imported goods to support economic efficiency and competitiveness within Australia. Enacted by the Chief Executive Officer of Customs, this instrument provides a mechanism for reducing customs duty on particular goods, in this case, certain electric immersion heaters, provided that no substitutable goods are produced in Australia. This legislative instrument facilitates the application process for tariff concessions, ensuring that businesses can more easily access lower duty rates on necessary imports, thereby enhancing their operational viability and potentially lowering consumer prices.
The policy objective of this measure is to foster a competitive market environment by enabling businesses to source goods at reduced costs, while also ensuring that the rights and interests of other stakeholders are protected. The instrument was introduced without any adverse submissions, indicating a broad acceptance of its provisions, and it commenced on the date of the application, 02 March 2007, without retroactively affecting existing rights or imposing new liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the process for Tariff Concession Orders (TCOs) which are administered by the Chief Executive Officer of Customs. The Act allows for applications to be made for a TCO by any person seeking a lower rate of customs duty on specified goods, provided these goods are not listed in section 269SJ, which details goods that cannot be subject to a TCO. The CEO evaluates applications based on core criteria, most importantly whether substitutable goods are produced in Australia in the ordinary course of business. If no such goods are identified, and no submissions opposing the TCO are received, the CEO issues a TCO, effective from the date the application is lodged. This process was recently applied to certain electric immersion heaters, resulting in TCO No. 0703433, which grants a free rate of duty for these goods, whereas the general rate is 5%. The TCO does not retroactively affect any rights or liabilities of individuals other than the Commonwealth and does not impose new liabilities on any party.
Key Provisions
The primary operative sections of this legislation concern the making of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). An application for a TCO can be made by any person to the Chief Executive Officer of Customs (CEO) (section 269F). A TCO will apply to goods that are not specified in section 269SJ of the Act and that meet the core criteria (section 269C). The core criteria are satisfied if, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions of key terms such as 'substitutable goods' and 'ordinary course of business' are provided in sections 269D and 269E of the Act respectively.
Entities and parties governed by this legislation are subject to several obligations. For example, applicants for a TCO must ensure that the goods they seek to have included in the order are not specified in section 269SJ and that the core criteria are met (section 269C). The CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). The CEO must also decide whether an application meets the core criteria and, if satisfied, make a written order declaring the goods subject to the TCO (subsection 269P(3)).
Under the Customs Act 1901, breaches of the legislation can result in various penalties and consequences. However, the explanatory statement does not detail specific offences or penalties related to the TCO process itself. It is understood that compliance with the Act and its regulations is essential to avoid potential civil or criminal liabilities. The specific penalties for breaches of the Customs Act 1901 and its regulations are not outlined in this explanatory statement but generally could include fines and imprisonment depending on the severity of the breach.