EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717269
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.
Powerlink Queensland Pty Ltd applied for a TCO in respect of certain power substations on 11 October 2007.
Instrument
TCO No 0717269 was made on 29 February 2008. It declares that those certain power substations 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. One submission objecting to the TCO application was received from Wilson Transformer Co Pty Ltd.
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. 0717269 is taken to have come into force on 11 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 Instrument No. 0717269 was enacted in 2008 under the Customs Act 1901, addressing the need for tariff concessions on specific goods that are not produced in Australia. The instrument was introduced to facilitate the importation of certain power substations by Powerlink Queensland Pty Ltd by providing a tariff concession, thereby reducing the customs duty from the general rate of 5% to free, as long as the CEO of Customs was satisfied that no substitutable goods were produced domestically. This legislative measure aims to support infrastructure projects by making it more cost-effective to import necessary equipment, thus encouraging investment in critical sectors. The instrument was developed and enacted by the relevant authority as outlined in the Customs Act 1901, ensuring that the application process adheres to the established criteria and involves public consultation to consider any objections.
Scope and Application
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) that can be applied for by any person or entity seeking a lower rate of customs duty on specified goods. The Act applies to individuals and corporations, including Powerlink Queensland Pty Ltd, who may apply for a TCO when they are importing goods that are not produced in Australia in the ordinary course of business and for which no suitable substitute is available domestically. The CEO of Customs reviews the application to ensure it meets the core criteria outlined in the Act, including the absence of substitutable goods in Australia. If the application satisfies these criteria, the CEO issues a TCO that applies to the specific goods in question, effectively reducing or eliminating customs duty on those goods. The Act’s jurisdiction is national, affecting all imports into Australia. However, certain goods specified in section 269SJ of the Act cannot be subject to a TCO, and the Act does not disadvantage any person other than the Commonwealth by imposing liabilities for actions taken prior to the TCO’s effective date. The TCO's commencement is retroactive to the date of application lodging, benefiting importers who can apply for duty refunds from that date.
Key Provisions
The Tariff Concession Order (TCO) No. 0717269 under the Customs Act 1901 (section 269F) provides for a concessional rate of customs duty on certain power substations, specifically those applied for by Powerlink Queensland Pty Ltd on 11 October 2007. The CEO of Customs was satisfied that the application met the core criteria set out in section 269C, and no substitutable goods were produced in Australia, as required by section 269D. The order (section 269P(3)) declares that these power substations are subject to a free rate of duty, whereas the general rate would be 5%.
Entities governed by this Act, such as Powerlink Queensland Pty Ltd, must ensure that their applications for TCOs are made in accordance with the requirements set out in the Customs Act 1901. This includes providing all necessary information and evidence to demonstrate that no substitutable goods are produced in Australia. The CEO must then assess the application against the core criteria and make a decision on whether to grant the TCO. If a TCO is granted, the entity must comply with any conditions or obligations imposed by the order.
Any person who believes that a TCO should not be granted has the opportunity to submit an objection to the CEO (subsection 269K(1)). In this case, Wilson Transformer Co Pty Ltd lodged a submission objecting to the TCO application. The CEO must consider all submissions before making a final decision on the application. If a TCO is granted despite objections, the objecting party may seek legal recourse, such as judicial review, to challenge the decision.
There are no specific offences, penalties, or civil/criminal consequences outlined in the Customs Act 1901 or the explanatory statement for breach of the provisions related to TCOs. However, any person who knowingly or recklessly makes a false or misleading statement in an application for a TCO may be subject to penalties under the Commonwealth Crimes Act 1914. The maximum penalty for such an offence is 12 months imprisonment or a fine of 10,000 penalty units, or both (subsection 136.1(2)). Additionally, any person who fails to comply with the conditions or obligations imposed by a TCO may face penalties under the Customs Act 1901, such as fines or imprisonment.