EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707198
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.
Enersys Australia Pty Limited applied for a TCO in respect of certain high frequency switch mode chargers on 03 July 2007.
Instrument
TCO No 0707198 was made on 21 September 2007. It declares that those certain high frequency switch mode chargers 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. 0707198 is taken to have come into force on 03 July 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 Parliament of Australia to establish a regulatory framework for customs and excise duties, and to provide for related matters. One of the key mechanisms introduced by the Act to provide flexibility and economic benefits is the scheme for Tariff Concession Orders (TCOs), which allows for the reduction or exemption of customs duty on specific goods. The problem or gap that this scheme was introduced to address was the need to provide tariff relief to industries where the goods in question are not produced domestically, thereby ensuring competitive parity with imported goods and supporting local industries. The Tariff Concession Instrument No. 0707198, enacted on 21 September 2007, is an example of this scheme in action, providing a tariff concession for certain high frequency switch mode chargers, thus reducing the customs duty from the general rate of 5% to free. This legislative instrument aims to ensure that Australian importers are not placed at a competitive disadvantage relative to their overseas counterparts, thereby fostering a fair and competitive domestic market.
Scope and Application
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 (CEO). These orders apply to goods for which an application has been successfully lodged by a person, provided that the goods are not specified in section 269SJ of the Act and meet the core criteria outlined in sections 269C and 269D. The application process requires that the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business. The TCOs reduce the rate of customs duty on the specified goods to zero, as demonstrated by TCO No. 0707198 for certain high frequency switch mode chargers, effective from the date the application was lodged. The CEO is mandated to publish notices in the Gazette inviting submissions from any interested parties, although no such submissions were received for this particular TCO. This legislation applies across the Commonwealth of Australia and operates independently of state and territory laws, ensuring a uniform approach to customs duty concessions.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0707198 pertain to the granting of a Tariff Concession Order (TCO) under section 269F of the Customs Act 1901 (the Act). The instrument, which was made on 21 September 2007, specifies that certain high frequency switch mode chargers are subject to a TCO, thereby applying the free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), rather than the general rate of 5% (sections 269P(3) and 269S(1)). This concession applies from the date the application was lodged, 03 July 2007, under subsection 269S(1).
The obligations imposed by this legislation primarily rest on the Chief Executive Officer of Customs (the CEO), who must determine whether an application for a TCO meets the core criteria set out in section 269C. These criteria include verifying that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must also ensure compliance with sections 269B, 269D, and 269E, which define the terms ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’, respectively. Moreover, under subsection 269K(1), the CEO is mandated to publish a notice in the Gazette inviting submissions from any person who might oppose the making of the TCO. In this case, no submissions were received.
The consequences for non-compliance with the provisions of this Act can be significant. Although the specific offences and penalties for breaching the Act are not detailed in the Explanatory Statement, it is reasonable to infer that any failure by the CEO to properly assess an application for a TCO, or any misrepresentation by an applicant, could result in legal repercussions. Typically, such breaches might lead to civil or criminal penalties, depending on the severity of the non-compliance. For instance, knowingly providing false information in an application could attract criminal penalties, while a failure to follow the prescribed procedures might result in civil penalties. However, the exact nature and extent of these penalties would need to be referred to the relevant sections of the Customs Act 1901 and any associated regulations.