EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712305
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 auxiliary plant on 1 August 2007.
Instrument
TCO No 0712305 was made on 12 October 2007. It declares that those certain auxiliary plant 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. 0712305 is taken to have come into force on 1 August 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 Commonwealth Parliament to regulate and facilitate the movement of goods across Australian borders, including the imposition of customs duties. The Act provides a framework for tariff concession orders (TCOs), which can reduce the customs duty on certain imported goods. Tariff Concession Instrument No. 0712305, introduced on 12 October 2007, addresses the gap in the Act by providing a mechanism for the Chief Executive Officer of Customs to assess and grant tariff concessions where no substitutable goods are produced in Australia. This specific instrument was created in response to an application from IHI Engineering Australia Pty Ltd for tariff concessions on certain auxiliary plant, resulting in a zero per cent duty rate for these goods, down from the general rate of five per cent. The policy objective is to support Australian industries by preventing domestic production from being adversely affected by cheaper imported goods, while also potentially benefiting importers by allowing them to apply for refunds of duties paid on the goods in question prior to the concession taking effect.
Scope and Application
The Tariff Concession Instrument No. 0712305 under the Customs Act 1901 applies to entities seeking tariff concessions on specific goods imported into Australia. This Act is administered at the Commonwealth level and concerns the application process for Tariff Concession Orders (TCOs) which can reduce the customs duty payable on certain goods. The instrument applies to entities such as IHI Engineering Australia Pty Ltd that have applied for a TCO to benefit from lower customs duties, provided the goods in question are not excluded under section 269SJ of the Act and meet the criteria set out in sections 269C, 269B, and 269D of the Act. These criteria ensure that the goods are not substitutable by Australian-produced goods and are intended for specific uses. The instrument does not impose any liabilities or disadvantage existing rights of individuals or entities other than the Commonwealth and provides an avenue for importers to seek refunds of duties paid before the TCO's effective date. This Act extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the rates of duty applicable to goods under a TCO.
Key Provisions
The Customs Act 1901, as amended, outlines a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (sections 269F and 269C). A TCO is a written order that effectively reduces the customs duty rate for specific goods, provided certain criteria are met. The Act defines the conditions under which a TCO can be applied for, including the requirement that no substitutable goods should be produced in Australia (section 269C). Substitutable goods, as defined, are those that can be put to the same use as the goods for which the TCO is being sought (section 269B).
The obligations imposed on the parties under this Act include the requirement for the CEO to review the application to determine if it meets the core criteria. This involves ensuring that no substitutable goods are produced in Australia on the day the application is lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may object to the granting of the TCO (subsection 269K(1)). In the case of TCO No. 0712305, the CEO did not receive any submissions opposing the TCO.
Should a party fail to comply with the requirements of the Customs Act 1901, they may face legal consequences. However, the explanatory statement does not detail specific offences or penalties associated with breaches of the Act. The statement does note that the TCO does not disadvantage any person by affecting their rights as at the date of registration, nor does it impose any liabilities on any person in respect of actions taken before the TCO's effective date (subsection 269S(1)). The rights of importers, however, are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).