EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708637
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.
ABI Group Contractors Pty Ltd applied for a TCO in respect of certain reversible jet fans on 06 June 2007.
Instrument
TCO No 0708637 was made on 17 August 2007. It declares that those certain reversible jet fans 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. 0708637 is taken to have come into force on 06 June 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 tariff concession orders (TCOs) under Part XVA. This legislation addresses the need for lower rates of customs duty on specific goods by allowing the Chief Executive Officer of Customs to issue TCOs to applicants. The policy objective is to facilitate trade by reducing the duty burden on certain goods, provided they meet the core criteria set forth in the Act. Specifically, a TCO can be issued if, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The Tariff Concession Instrument No. 0708637, issued on 17 August 2007, declared that certain reversible jet fans would be exempt from a 5% duty rate, as no substitutable goods were produced in Australia. This instrument took effect from the date of the application, 6 June 2007, and did not disadvantage or impose liabilities on any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0708637 applies to certain reversible jet fans and is governed by Part XVA of the Customs Act 1901. This legislation allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which provide a lower rate of customs duty on specified goods. The TCO applies to goods for which no substitutable goods are produced in Australia in the ordinary course of business, as defined under sections 269C, 269D, 269E, and 269SJ of the Act. The Act's jurisdictional reach extends to the Commonwealth level, impacting all entities and individuals involved in the importation of the specified goods. The application of the TCO is effective from the date the application is lodged, which in this case was 06 June 2007, and it does not affect any rights or liabilities accrued before this date for persons other than the Commonwealth. Importers of the specified goods can benefit from the reduced duty rate and may also apply for a refund of duty paid on imports since the TCO's effective date.
Key Provisions
The Tariff Concession Order (TCO) No. 0708637 under the Customs Act 1901 (section 269F) allows for a lower rate of customs duty on specified goods, in this case certain reversible jet fans. This is effective from the date the application for the TCO was lodged, 06 June 2007 (subsection 269S(1)). The order declares that these fans are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a free duty rate, down from the general 5% duty rate (subsection 269P(3)).
The process for obtaining a TCO requires the applicant to ensure that no substitutable goods are produced in Australia (section 269C). The Chief Executive Officer of Customs must also be satisfied that the goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The CEO must publish a notice in the Gazette inviting submissions from interested parties, although in this case, no submissions were received (subsection 269K(1)). If the CEO finds that the application meets the core criteria, a written order is issued declaring the specified goods subject to the tariff concession (subsection 269P(3)).
Parties governed by the Act must ensure that their goods do not fall under section 269SJ and that no substitutable goods are produced in Australia. Importers, in particular, must be aware of the effective date of the TCO and can apply for a refund of duty paid on goods imported since this date (paragraph 126(1)(r) of the Regulations). This TCO does not impose any liabilities on any person and does not affect the rights of individuals as at the date of registration.
Failure to comply with the provisions of the Customs Act 1901 or the Customs Tariff Act 1995 could result in civil or criminal consequences. The exact penalties for breaches are not specified in the explanatory statement, but generally, breaches of the Customs Act can lead to fines and imprisonment. Importers who fail to correctly apply for a duty refund under the TCO might face financial penalties and the risk of legal action for incorrect claims. The Act and associated regulations provide a framework for enforcement, ensuring compliance and the correct application of tariff concessions.