EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719685
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.
IHI Engineering Australia Pty Ltd applied for a TCO in respect of certain power station steam generation boiler air heaters parts on 20 November 2007.
Instrument
TCO No 0719685 was made on 01 February 2008. It declares that those certain power station steam generation boiler air heaters parts 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. 0719685 is taken to have come into force on 20 November 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. 0719685 was enacted in 2008 under the Customs Act 1901 to address the need for tariff concessions on specific imported goods. This legislation was introduced to provide relief from customs duty for certain goods not produced domestically in Australia, thereby promoting economic efficiency and competitiveness. The instrument was developed in response to an application by IHI Engineering Australia Pty Ltd for tariff concessions on certain power station steam generation boiler air heater parts, following the satisfaction of core criteria by the Chief Executive Officer of Customs. This instrument ensures that no Australian-made substitute goods were available for the imported items, thus justifying the tariff reduction from the standard rate of 5% to a free rate. The instrument’s objective aligns with facilitating smoother trade operations and reducing the financial burden on businesses importing these critical components for industrial use.
Scope and Application
The Customs Act 1901, under which the Tariff Concession Instrument No. 0719685 was made, applies to any person or entity seeking tariff concessions for imported goods that are not produced in Australia in the ordinary course of business. The Act specifically targets importers who are seeking a reduction in customs duty on certain goods, as outlined in the application process stipulated in the Act. This Act operates on a Commonwealth level, extending its reach to all entities and individuals involved in the importation of goods subject to a Tariff Concession Order (TCO). However, it excludes any goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. The application process and criteria for a TCO are further defined in the Act, which mandates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The Act also facilitates the process by which the Chief Executive Officer of Customs (CEO) must publish a notice in the Gazette inviting submissions on the TCO application. The instrument itself does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person.
Key Provisions
The primary sections of Tariff Concession Instrument No. 0719685 (sections 269C, 269F, 269K(1), 269P(3), and 269S) establish the framework under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs (CEO). These sections allow for the application of a lower rate of customs duty to goods specified in a TCO, provided that the CEO determines the application meets the core criteria. According to section 269C, these core criteria are satisfied if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. For the purposes of this legislation, "substitutable goods" (section 269D) are goods that can be used in place of the goods specified in the application, and "ordinary course of business" (section 269E) refers to the usual production of goods by a business.
The Act imposes specific obligations on both the applicant and the CEO. The applicant, such as IHI Engineering Australia Pty Ltd in this case, must lodge an application for a TCO with the CEO, ensuring that it does not pertain to goods listed in section 269SJ of the Act. The CEO, on the other hand, must assess whether the application meets the core criteria outlined in section 269C. If satisfied, the CEO is required to make a written TCO, as specified in section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties within a reasonable timeframe after accepting the application as valid (section 269K(1)).
Failure to comply with the provisions of the Customs Act 1901 may result in various legal consequences. Although the specific penalties for non-compliance with TCOs are not detailed in the Explanatory Statement, breaches of the Customs Act generally may lead to civil and criminal penalties. These can include fines and imprisonment, depending on the severity of the breach and other relevant factors. For instance, under section 245 of the Customs Act, a person who knowingly imports goods in contravention of the Act may face a penalty of up to 10 years imprisonment and substantial fines.
The Tariff Concession Instrument No. 0719685, which came into force on 20 November 2007, does not affect the rights of any person, except the Commonwealth, as at the date of registration. It specifically ensures that no person, other than the Commonwealth, is disadvantaged or subjected to liabilities for actions taken before the date of registration. Importers of the specified goods will benefit from this TCO by being able to apply for a refund of duty on goods imported since the day the TCO came into force, as outlined in paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any new liabilities on any person.