EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716642
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.
Water Corporation applied for a TCO in respect of certain pipe jacking plant on 28 September 2007.
Instrument
TCO No 0716642 was made on 24 January 2008. It declares that those certain pipe jacking 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 10%. 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. 0716642 is taken to have come into force on 28 September 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 Commonwealth Parliament, establishes a framework under which the Chief Executive Officer of Customs can grant tariff concession orders (TCOs) to reduce customs duty on certain goods. This was introduced to address the need for flexibility in customs duties to support economic efficiency and competitiveness, particularly in cases where no domestic alternatives exist. The Explanatory Statement for Tariff Concession Instrument No. 0716642, made on 24 January 2008, illustrates the application of this framework when the Water Corporation sought a concession for specific pipe jacking plant, leading to a reduction in duty from 10% to free. The policy objective is to ensure that the Australian market is not unduly burdened by tariffs on goods that cannot be locally produced, thereby promoting the efficient allocation of resources and supporting industry competitiveness.
Scope and Application
The Tariff Concession Instrument No. 0716642 under the Customs Act 1901 applies specifically to the certain pipe jacking plant for which Water Corporation made an application. The Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide for a lower rate of customs duty on specified goods. This particular TCO applies to the goods that meet the core criteria set out in the Act, including the absence of substitutable goods produced in Australia. The geographic reach of this Act is national, as it pertains to the Commonwealth and its customs regulations. Any entity or individual involved in the importation of the specified goods is subject to the terms of this TCO. The instrument was made effective from the date of the application, 28 September 2007, and no submissions were received opposing the TCO. The TCO does not retroactively disadvantage any person or impose liabilities for actions taken before its effective date. Instead, it allows for potential duty refunds for importers of the specified goods under the relevant regulations.
Key Provisions
The main sections of the Customs Act 1901 that are pertinent to Tariff Concession Orders (TCOs) include sections 269C, 269F, 269P, and 269SJ (sections 269C, 269F, 269P, 269SJ). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO for certain goods. Section 269C stipulates that an application for a TCO meets the core criteria if no substitutable goods are produced in Australia on the day the application is lodged. Section 269P(3) states that if the CEO is satisfied that an application meets the core criteria, they must make a written order (a TCO). Section 269SJ outlines the goods that cannot be subject to a TCO. A TCO, once issued, specifies that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, which may include a reduction or exemption from customs duty.
The Act imposes several obligations on the parties involved. The CEO must carefully evaluate each TCO application to ensure it meets the core criteria, specifically that no substitutable goods are produced in Australia on the day of the application. If the application meets these criteria, the CEO is obligated to issue a written TCO. Additionally, upon receiving a valid application, the CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be granted to submit their reasons. This ensures transparency and allows for public input before the TCO is issued. The applicant, in this case, Water Corporation, must provide all necessary information and evidence to substantiate their claim that no substitutable goods are produced in Australia.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations can lead to various consequences. The Act does not explicitly detail specific offences or penalties for breaches related to TCOs, but general penalties under the Customs Act may apply. These can include fines and, in severe cases, imprisonment. The exact penalties depend on the nature and severity of the breach, as outlined in other sections of the Act and related regulations. It is crucial for all parties to adhere to the provisions of the Act to avoid these potential repercussions.
Under this specific TCO, any breach of the conditions set forth by the order could result in the forfeiture of the tariff concession. This means that the goods would revert to being subject to the standard customs duty rate, which could lead to financial penalties for the importer. Additionally, if the CEO determines that the concession was granted in error, they have the authority to revoke the TCO, leading to further financial implications for the importer. The Act ensures that the rights of non-Commonwealth persons are not adversely affected by the issuance of a TCO, and it imposes no new liabilities on any person as a result of the concession.