EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716758
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.
Siemens Ltd applied for a TCO in respect of certain centrifugal pumping systems on 03 October 2007.
Instrument
TCO No 0716758 was made on 14 December 2007. It declares that those certain centrifugal pumping systems 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. 0716758 is taken to have come into force on 03 October 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 Order No. 0716758, introduced under the Customs Act 1901, aims to address the issue of applying tariff concessions to specific goods that are not produced in Australia, thus ensuring that Australian businesses are not unfairly disadvantaged. Enacted by the Chief Executive Officer of Customs, this order facilitates the application process for tariff concessions on goods that meet the criteria outlined in the Act. The policy objective is to provide relief to importers by reducing or eliminating customs duties on certain goods, thereby enhancing the competitiveness of Australian businesses in the global market. This approach ensures that the rights and interests of all parties, including importers, are safeguarded while promoting fair trade practices.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on certain goods. This mechanism applies to any person or entity that submits an application for a TCO in respect of goods, provided that these goods are not specified in section 269SJ of the Act as ineligible for tariff concessions. The application process requires the CEO to assess whether the goods for which a concession is sought are not substitutable by goods produced in Australia, as outlined in sections 269C and 269D of the Act. Should the CEO determine that the application meets the core criteria, a TCO is issued, effectively reducing or eliminating the customs duty on the specified goods. The TCO does not affect any existing rights or liabilities of persons other than the Commonwealth, and it can provide beneficial impacts, such as eligibility for duty refunds, to importers of the affected goods. The CEO must also publish notices in the Gazette inviting submissions from interested parties, although in the case of TCO No. 0716758, no submissions were received.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0716758 under the Customs Act 1901 (the Act) include sections 269C, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) concerning specific goods. If the CEO determines that the application does not involve goods listed in section 269SJ, which are ineligible for a TCO, they must then assess whether the application meets the core criteria outlined in section 269C. This assessment hinges on the absence of substitutable goods produced in Australia at the time the application was lodged. If the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business, they are required under section 269P(3) to issue a written TCO, specifying the applicable item in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on parties applying for a TCO. Firstly, an applicant must ensure that the goods for which the TCO is sought are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The applicant must also demonstrate that no substitutable goods were produced in Australia on the day the application was lodged. Substitutable goods are defined as those produced in Australia that can be used in the same way, including in design, as the goods in question. The CEO must then publish a notice in the Gazette inviting any person who believes the TCO should not be made to submit their reasons. The CEO is required to consider these submissions before making a final decision.
There are no explicit offences or penalties mentioned in the explanatory statement for breach of the provisions under this Instrument. However, the failure to comply with the conditions for a TCO application or misrepresenting facts could potentially lead to administrative consequences. For instance, if an applicant knowingly submits false information, this could be considered misleading conduct under other sections of the Customs Act, leading to civil or criminal penalties. The maximum penalties for misleading conduct under the Customs Act can include fines of up to $22,200 for individuals and significantly higher fines for corporations, in addition to potential imprisonment. These penalties reflect the seriousness of providing incorrect information to the CEO in the TCO application process.