EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707023
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.
B & R Enclosures Pty Ltd applied for a TCO in respect of certain heat exchangers on 10 May 2007.
Instrument
TCO No 0707023 was made on 20 July 2007. It declares that those certain heat exchangers 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. 0707023 is taken to have come into force on 10 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. 0707023, enacted in 2007, amends the Customs Act 1901 to provide a lower rate of customs duty for specific goods, namely certain heat exchangers, which are subject to a Tariff Concession Order (TCO). This legislative instrument was introduced to address the need for a streamlined process to facilitate the importation of goods that are not produced domestically, thus ensuring that Australian consumers and businesses can access competitively priced products without undue tariffs. The instrument was enacted by the Chief Executive Officer of Customs, acting under the authority granted by the Customs Act, with the policy objective of promoting economic efficiency and supporting Australian industries by allowing for the tariff concessions where no substitutable goods are produced in Australia.
The process for the creation of this Tariff Concession Order involves an application to the CEO, who assesses whether the application meets the core criteria outlined in the Customs Act, such as the absence of substitutable goods being produced in Australia. Following a successful application and meeting these criteria, the CEO issues a written order, known as a TCO, specifying the lower duty rate applicable to the specified goods. In this particular case, B & R Enclosures Pty Ltd successfully applied for a TCO for certain heat exchangers, resulting in a zero per cent duty rate, down from the general rate of five per cent. This legislative measure ensures that importers of these goods can benefit from tariff reductions, potentially leading to cost savings and increased competitiveness for businesses importing these goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCO) which can be issued by the Chief Executive Officer of Customs (the CEO) to reduce the rate of customs duty on certain goods. This Act applies to any person or entity that seeks to import goods that may qualify for tariff concessions, provided that the goods do not fall within the exclusions specified in section 269SJ of the Act. This exclusion includes goods that are deemed harmful or contrary to public interest. The application process requires that on the day the application is lodged, there are no goods produced in Australia that could substitute for the imported goods, as defined by section 269D of the Act. The geographic reach of this legislation is national, impacting all imports into Australia. The application of the Act can be extended or restricted through subordinate instruments such as the Customs Tariff Act 1995, which specifies the applicable duty rates in the Tariff. In the instance of Tariff Concession Instrument No. 0707023, the CEO issued a concession on certain heat exchangers, reducing their duty rate from 5% to 0%, effective from the date of the application, 10 May 2007. The CEO is mandated to consult the public by publishing notices in the Gazette, although in this case, no submissions were received. The commencement of the TCO aligns with the date of the application, and it does not affect existing rights or impose liabilities for actions taken prior to its registration.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 0707023 (TCO No. 0707023) under the Customs Act 1901 focus on the concession of customs duty for certain goods. Section 269F (2) allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) regarding specific goods. Once the application is lodged, the CEO must assess whether the goods meet the core criteria specified under sections 269C and 269SJ. If the application meets the core criteria, and notably if no substitutable goods are produced in Australia, the CEO is required under section 269P(3) to issue a TCO, which specifies the reduced duty rate applicable to the goods in question.
In this particular case, TCO No. 0707023 was issued on 20 July 2007 for certain heat exchangers. This order was made after B & R Enclosures Pty Ltd applied for a concession on 10 May 2007. The TCO declares that these heat exchangers are subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, as the CEO was satisfied that no substitutable goods were produced in Australia. The general duty rate for these goods is 5%, but the TCO reduces this to 0%.
The obligations imposed by the Customs Act 1901 on parties applying for a TCO include ensuring that the goods specified in the application do not fall under the prohibited category outlined in section 269SJ. Furthermore, the CEO has the duty to assess the application against the criteria set out in sections 269C and 269E, and to publish a notice in the Gazette inviting submissions from any interested parties, as required by subsection 269K(1). In this instance, no submissions were received in response to the published notice.
The Act also delineates the consequences for non-compliance or breach of the conditions set out in the TCO. While the explanatory statement does not explicitly mention specific offences, penalties, or civil/criminal consequences for breach, it is understood that failure to adhere to the terms of a TCO could potentially lead to legal repercussions. The exact penalties for breach would typically be governed by other sections of the Customs Act 1901 or related regulations, which may include fines or other administrative sanctions. The Act ensures that the TCO does not disadvantage any person other than the Commonwealth and does not impose liabilities for actions taken prior to the TCO's effective date.