EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706457
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 steam generation boiler parts on 4 May 2007.
Instrument
TCO No 0706457 was made on 20 July 2007. It declares that those certain power station steam generation boiler 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. 0706457 is taken to have come into force on 4 May 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. 0706457, enacted in 2007 under the Customs Act 1901, addresses the issue of applying tariff concessions for specific goods to support Australian businesses and reduce import costs. The Customs Act 1901 allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which reduce the duty on certain imported goods, provided no substitutable goods are produced in Australia. This initiative aims to support industries by ensuring they have access to competitively priced inputs. The instrument was created in response to an application by IHI Engineering Australia Pty Ltd for tariff concessions on certain power station steam generation boiler parts, and after assessing that no substitutable goods were produced in Australia, the CEO issued a TCO reducing the duty on these parts from 5% to 0%. The policy objective, as outlined in the Customs Act 1901, is to facilitate the efficient operation of the customs system by providing streamlined processes for tariff concessions where appropriate.
Scope and Application
The Tariff Concession Instrument No. 0706457, made under the Customs Act 1901, applies to the specific goods in question, namely certain power station steam generation boiler parts, as applied for by IHI Engineering Australia Pty Ltd. The instrument is designed to provide tariff concessions for these goods, reducing the customs duty from the general rate of 5% to 0%. This concession is applicable to the goods specified in the instrument, and it is intended to benefit importers of these goods by potentially allowing them to apply for a refund of any duty paid on those goods imported since the date the TCO is deemed to have come into force. The instrument operates within the framework established by the Customs Act 1901, which allows the Chief Executive Officer of Customs to make Tariff Concession Orders if certain criteria are met, particularly ensuring that no substitutable goods are produced in Australia. The geographic reach of this legislation is national, applying across Australia in accordance with the Customs Act 1901. The application of this Tariff Concession Order does not extend to any goods specified in section 269SJ of the Customs Act 1901, which outlines goods that cannot be subject to a TCO. Furthermore, the order does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person.
Key Provisions
The main sections of the Customs Act 1901 that are relevant to Tariff Concession Orders (TCOs) include section 269F, which allows for applications to be made to the Chief Executive Officer of Customs (CEO) for a TCO. Section 269C stipulates the core criteria that an application must meet, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B defines key terms such as 'goods produced in Australia', 'ordinary course of business' and'substitutable goods'. If the CEO is satisfied that these criteria are met, they must issue a written TCO order, as per section 269P(3). In this case, Tariff Concession Order No. 0706457 was issued for certain power station steam generation boiler parts on 20 July 2007, declaring that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a 0% duty rate.
The Act imposes several obligations on both the CEO and applicants for TCOs. The CEO must accept valid applications, assess them against the core criteria, and make an order if the criteria are met. They must also publish a notice in the Gazette inviting submissions from any interested parties and consider any submissions received. In this instance, the CEO did not receive any submissions opposing the application. Applicants must ensure their applications meet the criteria and provide all necessary information to the CEO to facilitate a decision.
The Act does not explicitly outline specific offences or penalties for breaches related to TCOs. However, any failure to comply with the requirements of the Customs Act 1901, such as providing false information in an application or contravening the terms of a TCO, could lead to legal action under other provisions of the Act. Penalties for breaches of the Customs Act 1901 can vary depending on the nature and severity of the breach, potentially including fines and imprisonment. For example, knowingly making a false statement under the Act could result in a fine of up to $22,200 or imprisonment for up to two years, or both, under section 263 of the Act.
Tariff Concession Order No. 0706457 has the effect of reducing the duty on certain power station steam generation boiler parts to 0%. This concession does not affect any existing rights of persons other than the Commonwealth as at the date of the registration of the TCO. Importers of these goods will have the right to apply for a refund of duty paid on imports since the TCO is deemed to have come into force on 4 May 2007, under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any new liabilities on any person.