EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703751
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.
IHI Engineering Australia Pty Ltd applied for a TCO in respect of certain power station turbine house parts on 12 March 2007.
Instrument
TCO No 0703751 was made on 8 June 2007. It declares that those certain power station turbine house 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 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. 0703751 is taken to have come into force on 12 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 Customs Act 1901, as amended, includes provisions under Part XVA for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislative framework was enacted to facilitate tariff concessions on certain goods, thereby addressing a gap in the duty-free access to imported goods under specific conditions. The Tariff Concession Instrument No. 0703751, enacted in 2007, is an example of such an order. It was introduced by the CEO in response to an application from IHI Engineering Australia Pty Ltd for tariff concessions on certain power station turbine house parts. The policy objective is to reduce the customs duty for these goods from 5% to 0%, provided that no substitutable goods are produced in Australia, thereby promoting trade and economic efficiency. The CEO's decision was made after reviewing the application and ensuring compliance with the legislative criteria, and no objections were received during the consultation period.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to individuals and entities seeking to import goods that may qualify for reduced customs duty rates through a TCO. The Act mandates that a TCO application can be considered only if the goods in question are not specified in section 269SJ, which lists goods ineligible for tariff concessions, and if the core criteria outlined in sections 269C and 269F are satisfied. These criteria essentially require that no substitutable goods are produced in Australia at the time the application is lodged. The application process also involves publishing a notice in the Gazette to allow for any objections from interested parties. Once a TCO is granted, the reduced duty rate applies retroactively from the date the application was lodged. Importantly, the Act ensures that the rights of individuals and entities are not adversely affected by the TCO, and it provides a mechanism for importers to seek duty refunds for goods imported since the effective date of the concession. The TCO does not impose any new liabilities on individuals or entities.
Key Provisions
The primary operative sections of the Customs Act 1901 that are relevant to the Tariff Concession Order (TCO) No. 0703751 include sections 269F, 269C, and 269P. Section 269F allows any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided the goods are not those specified in section 269SJ, which are ineligible for TCOs. The CEO then assesses whether the application meets the core criteria outlined in section 269C, which requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If these criteria are met, section 269P(3) mandates the CEO to make a written TCO order.
The Act imposes several obligations on the parties involved. For the applicant, the key obligation is to ensure that the TCO application is not in respect of goods specified in section 269SJ and that the application meets the core criteria outlined in section 269C. For the CEO, the main obligations include accepting valid TCO applications, assessing whether they meet the core criteria, publishing a notice in the Gazette inviting submissions from interested parties, and making a written TCO if the criteria are met. In this instance, the CEO did not receive any submissions opposing the TCO, indicating broad acceptance of the application.
The Act provides for potential consequences for non-compliance or breaches, although the specific provisions in this instance are not detailed. Generally, under Australian law, breaches of customs regulations can result in both civil and criminal penalties. Civil penalties can include fines and the requirement to pay duties, while criminal penalties may include imprisonment, especially if the breach is deemed to be wilful or involves fraud. The maximum penalties would depend on the specific nature and severity of the breach, but they could range from fines to substantial imprisonment terms.
For TCO No. 0703751, the key focus is on the application of a reduced customs duty rate for certain power station turbine house parts, from the general rate of 5% to 0%. This reduction aims to facilitate the importation of these specific goods, provided they meet the criteria outlined in the Act. The TCO does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, meaning that it does not impose new liabilities or disadvantage existing rights. Importers can benefit from this concession by applying for refunds of duty paid on these goods since the TCO's effective date, 12 March 2007.