EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0716976
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 hydraulic oil system on 8 October 2007.
Instrument
TCO No 0716976 was made on 14 December 2007. It declares that those certain hydraulic oil system 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. 0716976 is taken to have come into force on 8 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, includes a scheme that allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. This scheme was introduced to provide relief in the form of lower customs duties on certain goods, thereby promoting trade and economic growth. The Customs Act specifies the criteria for TCO applications, including ensuring that no substitutable goods are produced in Australia at the time of application. Siemens Ltd applied for a TCO for certain hydraulic oil systems, which was granted on 14 December 2007 after it was determined that no substitutable goods were being produced domestically. The TCO allows these goods to be subject to a free rate of duty, down from the general rate of 5%, effective from 8 October 2007, the date the application was lodged. The process involved public consultation, though no objections were received, and the TCO does not impose any new liabilities or disadvantage any persons' rights as of the registration date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to particular goods and grant tariff concessions, which may include a reduction or exemption from customs duty. An entity or individual can apply to the CEO for a TCO if the goods in question do not fall under the restricted categories outlined in section 269SJ of the Act and meet the core criteria specified in sections 269C, 269D, and 269E. The CEO must also consider whether substitutable goods are produced in Australia, as per section 269P(3). If the application meets these requirements, the CEO issues a written TCO, effectively applying a lower rate of duty to the specified goods. The TCO applies to the Commonwealth and all entities within Australia, providing them with the specified tariff concessions as per the instrument. The TCO's jurisdictional reach is national, applying across all states and territories within Australia. However, it does not affect the rights or liabilities of any person other than the Commonwealth in respect of actions taken before the TCO's effective date.
Key Provisions
The key operative sections of this legislation revolve around the making of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). If an application for a TCO is submitted to the Chief Executive Officer (CEO) of Customs, the CEO must assess whether it meets the core criteria outlined in section 269C. If no substitutable goods are produced in Australia on the date the application was lodged, the CEO must make a written order, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). This particular TCO, numbered 0716976, made on 14 December 2007, applies to certain hydraulic oil systems, which are now subject to a free rate of duty instead of the general 5% rate.
The obligations imposed on the parties by this Act primarily rest on the CEO of Customs. The CEO must ensure that the application for a TCO is not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Once the CEO accepts an application as valid, they must publish a notice in the Gazette, inviting any person who may have reasons for opposing the TCO to lodge a submission (subsection 269K(1)). If no submissions are received, the CEO must proceed to make the TCO. The Act also requires that the TCO does not affect the rights of any person, except the Commonwealth, in respect of anything done or omitted before the date of registration of the TCO.
The legislation does not explicitly outline offences, penalties, or civil/criminal consequences for breach of the TCO provisions. However, the process of making a TCO is closely regulated, and failure to adhere to the prescribed steps or criteria could potentially lead to legal challenges regarding the validity of the TCO. The general principle is that the TCO should not disadvantage any person or impose liabilities in respect of actions taken before the date of registration. The Act ensures that the rights of importers are beneficially affected and that they can apply for a refund of duty on goods imported since the TCO came into force, which is on the date the application was lodged.