EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705381
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.
Kelair Pumps Australia Pty Limited applied for a TCO in respect of certain pump parts on 12 April 2007.
Instrument
TCO No 0705381 was made on 29 June 2007. It declares that those certain pump 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 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. 0705381 is taken to have come into force on 12 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 Australian Parliament, establishes a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs). These orders, as detailed in Part XVA of the Act, allow for reduced customs duty rates on specified goods, subject to certain criteria. The primary issue addressed by this legislation is the facilitation of trade by reducing the cost of importing goods that are not produced domestically. The Tariff Concession Instrument No. 0705381, made on 29 June 2007, exemplifies the application of this framework. Kelair Pumps Australia Pty Limited successfully applied for a TCO for certain pump parts, resulting in a duty rate reduction from 5% to free, effective from 12 April 2007. This instrument was created following a process that included public consultation, although no objections were raised. The policy objective, as outlined in the Act, is to support Australian trade by ensuring that imported goods that are not domestically produced benefit from tariff reductions, thereby encouraging competition and economic efficiency.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislation applies to entities or individuals who seek tariff concessions for goods that are not produced in Australia in the ordinary course of business. These TCOs result in a lower rate of customs duty for the specified goods, subject to the core criteria outlined in the Act. The application process involves the submission of a request to the CEO, followed by an assessment to determine if the application meets the core criteria, which includes the absence of substitutable goods produced domestically. Once a TCO is issued, it applies to the goods from the date of the application, offering tariff relief and potentially enabling importers to seek refunds for duties paid prior to the TCO's effective date. The Act's jurisdictional reach is national, encompassing all goods imported into Australia, with specific exclusions for certain goods as detailed in section 269SJ. The scope of the Act can be further refined through subordinate instruments, which may define additional details or criteria for the issuance of TCOs.
Key Provisions
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 (section 269F). These orders allow for a lower rate of customs duty on specified goods, provided the application for the TCO meets certain criteria. Section 269C stipulates that a TCO application is valid if, on the day it is lodged, there are no substitutable goods produced in Australia in the ordinary course of business. Substitute goods are those produced in Australia that can be put to a use corresponding with the goods in question. If the CEO is satisfied that the application meets these criteria, they must make a written order (section 269P(3)) declaring the goods to which the concession applies.
The obligations under the Act require any person seeking a TCO to ensure that their application is valid and meets the core criteria outlined in the Act. This includes verifying that no substitutable goods are produced in Australia at the time of application. The CEO is obligated to publish a notice in the Gazette once an application is accepted as valid, inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In this instance, the CEO received no submissions opposing the TCO. The TCO comes into force on the day the application is lodged (subsection 269S(1)), and it does not disadvantage any person by affecting their rights as of the registration date or imposing liabilities for actions taken before that date.
Failure to comply with the provisions of the Customs Act 1901 regarding the TCO process can lead to legal consequences. Although the explanatory statement does not detail specific offences or penalties, breaches of the Act generally could result in civil or criminal penalties. For example, providing false information in an application may lead to fines or imprisonment under other sections of the Act, depending on the severity and intent of the breach. The maximum penalties for such offences can vary, but they typically include substantial fines and potential imprisonment terms as stipulated in the relevant sections of the Customs Act 1901 and the Customs Tariff Act 1995.