EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705008
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.
Invensys Appliance Controls applied for a TCO in respect of certain solenoid valves on 3 April 2007.
Instrument
TCO No 0705008 was made on 15 June 2007. It declares that those certain solenoid valves 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. 0705008 is taken to have come into force on 3 April 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, enacted by the Commonwealth Parliament, establishes a framework for the application of customs duties in Australia. Part XVA of the Act introduces the concept of Tariff Concession Orders (TCOs), which allow for the application of lower rates of customs duty on certain goods. The problem this legislation addresses is the need to provide tariff relief for imported goods that do not have Australian-made equivalents, thereby supporting industries that might otherwise be disadvantaged by high import duties. The policy objective is to ensure fair competition and economic efficiency by preventing domestic industries from being undercut by cheaper imported goods that serve the same purpose.
The explanatory statement for Tariff Concession Instrument No. 0705008 illustrates the process by which Invensys Appliance Controls successfully applied for a TCO for certain solenoid valves, resulting in a reduction of the duty rate from 5% to 0%. The Chief Executive Officer of Customs (CEO) was satisfied that no substitutable goods were produced in Australia, meeting the core criteria set out in the Act. The instrument came into effect on the date of the application, 3 April 2007, and no objections were raised during the consultation period. This outcome benefits importers by potentially entitling them to refunds of duty paid on the affected goods since the effective date of the TCO.
Scope and Application
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) may be made, allowing for a lower rate of customs duty on certain goods. This is facilitated by Part XVA of the Act, which permits the Chief Executive Officer of Customs (the CEO) to make such orders. Any person may apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act. The CEO is required to determine whether the application meets the core criteria, primarily by assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must issue a written order declaring that the goods in question are subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995. The TCO applies from the date the application was lodged and benefits importers by potentially allowing them to apply for a refund of duty on goods imported since that date, without imposing any new liabilities on persons other than the Commonwealth.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0705008 under the Customs Act 1901 (section 269P(3)) require the Chief Executive Officer of Customs (CEO) to make a Tariff Concession Order (TCO) if satisfied that a TCO application meets the core criteria. Specifically, section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This means that if the CEO determines there are no Australian-made alternatives to the goods specified in the application, a TCO can be issued. Section 269P(3) mandates that the CEO must then issue a written order, declaring that the goods in question are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved. The applicant, such as Invensys Appliance Controls in this case, must submit a valid application to the CEO, ensuring that the application details the specific goods and provides evidence that no substitutable goods were produced in Australia. The CEO has the duty to assess the application against the core criteria outlined in section 269C and to publish a notice in the Gazette inviting submissions from any interested parties. If no objections are received, the CEO must proceed to issue the TCO. Additionally, section 269K(1) requires the CEO to act as soon as practicable after accepting a TCO application as valid.
Failure to comply with the requirements set out in the Customs Act 1901 can result in legal consequences. While the Act does not explicitly outline specific offences or penalties for breaches related to TCOs, general provisions under the Act may apply. For instance, any misuse of the concession, such as applying for a TCO when substitutable goods are indeed produced in Australia, could be considered an offence under section 146, which prohibits fraudulent conduct. Penalties for such offences can include fines and imprisonment, as stipulated in the Crimes Act 1914. Furthermore, any party found to be in breach of the terms of a TCO may face civil penalties, including the requirement to repay any duties that were improperly avoided.
The instrument also ensures that the TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration. This means that the TCO cannot be used to disadvantage any individual or impose liabilities for actions taken before the TCO was registered. Importers of the goods in question may benefit by applying for a refund of duties paid on goods imported since the TCO is deemed to have come into force.