EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716832
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.
Fluid Dynamics Pty Ltd applied for a TCO in respect of certain water to oil coolers on 04 October 2007.
Instrument
TCO No 0716832 was made on 14 December 2007. It declares that those certain water to oil coolers 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. 0716832 is taken to have come into force on 04 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 Customs Act 1901, enacted by the Australian Parliament, facilitates the imposition of lower rates of customs duty on certain goods through Tariff Concession Orders (TCOs). The purpose of this legislation is to address economic imbalances by ensuring that Australian consumers and businesses have access to competitively priced goods that are not produced domestically. Specifically, section 269F of the Act allows for applications to the Chief Executive Officer of Customs for TCOs, which apply if no substitutable goods are produced in Australia. In response to an application from Fluid Dynamics Pty Ltd on 4 October 2007, TCO No. 0716832 was issued on 14 December 2007, applying a zero rate of duty to certain water to oil coolers previously subject to a 5% duty. The TCO, which came into effect on the date of the application, does not disadvantage non-Commonwealth entities and allows for duty refunds for importers under the Customs Regulations 1993.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), allowing for a lower rate of customs duty on specified goods. These orders apply to individuals or entities that have submitted an application under section 269F of the Act, provided that the goods in question are not listed in section 269SJ, which excludes certain goods from tariff concessions. The core criteria for approval, outlined in section 269C, necessitates that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are further elaborated in sections 269D, 269E, and 269F respectively. The CEO's decision to issue a TCO, as per section 269P(3), is contingent on satisfying these core criteria. Once granted, the TCO applies retroactively from the date the application was lodged, impacting the rights of importers to claim refunds for duties paid on goods imported since that date, without imposing any new liabilities on non-Commonwealth entities.
Key Provisions
The Customs Act 1901 (section 269F) allows for the application of Tariff Concession Orders (TCOs) by any person seeking a lower rate of customs duty on certain goods. This process begins when an application is submitted to the Chief Executive Officer of Customs (section 269C), who must then determine if the application meets the core criteria. Specifically, section 269C requires that, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. A TCO application meets the core criteria if certain conditions are met, including the absence of Australian-made goods that can substitute the goods in question (section 269D and 269E). If the CEO is satisfied that the application meets these criteria, they must issue a written order declaring that the goods in question are subject to a specified item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In this instance, TCO No. 0716832 was issued for certain water to oil coolers, which now attract a 5% duty rate under the concession.
The obligations under the Customs Act 1901 (section 269K(1)) require the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid. This notice invites any interested parties to lodge submissions if they believe the TCO should not be granted. In the case of TCO No. 0716832, no submissions were received in response to this notice. The TCO is considered effective from the date the application was lodged (section 269S(1)), which for TCO No. 0716832 was 4 October 2007. This date marks the commencement of the TCO, ensuring that it does not affect the rights of any person as they stood prior to the registration date (section 269S(1)).
Under the Customs Act 1901, any breach of the provisions related to TCOs could result in both civil and criminal consequences. While the Act does not explicitly detail specific offences or penalties for breaches, general provisions of the Customs Act may apply. Generally, breaches can result in fines or imprisonment, depending on the severity and intent behind the breach. The maximum penalties for breaches under the Customs Act can include fines of up to $22,200 for individuals and $111,000 for corporations, along with potential imprisonment terms. These penalties serve as a deterrent against non-compliance and ensure that the integrity of the tariff concession scheme is maintained.