EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704385
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.
Dalkia Technical Services Pty Ltd applied for a TCO in respect of certain heat pumps on 26 March 2007.
Instrument
TCO No 0704385 was made on 15 June 2007. It declares that those certain heat pumps 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. 0704385 is taken to have come into force on 26 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 was enacted by the Commonwealth Parliament to regulate the importation and exportation of goods, including the imposition of customs duties. A significant aspect of this Act is the establishment of a scheme for Tariff Concession Orders (TCOs) under Part XVA. The primary objective of this scheme is to provide relief from customs duties on imported goods under certain conditions, such as when no substitutable goods are produced in Australia. This mechanism is intended to support industries by making imported goods more competitively priced, thereby encouraging trade and economic activity. Dalkia Technical Services Pty Ltd's application for a TCO in respect of certain heat pumps in March 2007 exemplifies the practical application of this scheme, resulting in Instrument TCO No. 0704385 which reduced the duty on these goods from 5% to free, effective from the date of the application. The process underscores the Act's aim to balance economic incentives with regulatory oversight.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, who is tasked with determining the eligibility of goods for lower customs duty rates. This process applies to any individual or entity seeking to import goods that may qualify for tariff concessions, provided that such goods are not specified in section 269SJ of the Act, which excludes certain goods from TCO consideration. For a TCO to be granted, the CEO must be convinced that no substitutable goods are produced in Australia at the time of the application, as per section 269C of the Act. The scope of this legislation is national, applying across all jurisdictions in Australia, but it does not extend to goods that are specified as ineligible in section 269SJ. The application of the Act can be further detailed through subordinate instruments, which may provide additional clarification or detail on the process or criteria for TCOs. The commencement of the TCO is retroactive to the date of application, as per subsection 269S(1) of the Act, ensuring that any rights accrued are protected and that no new liabilities are imposed on parties prior to the registration of the TCO.
Key Provisions
The main operative sections of this legislation relate to the process and criteria for making Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C, 269B, 269D, 269E, 269P, and 269SJ). These sections outline the conditions under which a TCO may be granted by the Chief Executive Officer of Customs (the CEO) and the specific criteria that must be satisfied for an application to be approved. For instance, Section 269C states that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269SJ, meanwhile, specifies goods that cannot be subject to a TCO.
The obligations imposed by this Act on the parties involved include ensuring that the application for a TCO is made in good faith and meets the core criteria. The CEO is obligated to evaluate the application against these criteria and to make a decision based on the information provided. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made. This is outlined in Section 269K(1). Dalkia Technical Services Pty Ltd, in this instance, fulfilled the requirement to submit an application that met the core criteria, and the CEO made a written order (TCO) once satisfied that the application met these criteria.
Breaches of the obligations set out in this legislation may result in certain penalties or consequences. However, the Explanatory Statement does not specify any particular offences, penalties, or civil/criminal consequences for non-compliance with the Act's requirements. The focus appears to be more on the procedural and evaluative aspects of the TCO application process rather than on punitive measures for failure to comply with the obligations outlined in the Act.