EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0719751
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.
John Holland Pty Ltd applied for a TCO in respect of certain pressure transfer pumps on 20 November 2007.
Instrument
TCO No 0719751 was made on 8 February 2008. It declares that those certain pressure transfer pumps 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. 0719751 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 peron 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. 0719751 was enacted in 2008 under the Customs Act 1901 to provide a specific group of goods with reduced customs duty rates. This instrument was introduced to address the problem of high customs duties on certain imported goods that do not have locally produced alternatives. The Chief Executive Officer of Customs, acting under the authority granted by the Customs Act, was tasked with determining whether an application for tariff concession met the core criteria, particularly ensuring that no substitutable goods were produced in Australia at the time of the application. John Holland Pty Ltd applied for this concession concerning certain pressure transfer pumps, and upon satisfying the core criteria, the CEO issued Tariff Concession Order No. 0719751, which resulted in these pumps being subject to a duty rate of free instead of the general rate of 5%. The policy objective underpinning this legislation is to facilitate the import of goods that are not produced locally, thereby potentially reducing costs for importers and encouraging competition within the market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the application for Tariff Concession Orders (TCOs) by individuals or entities seeking a lower rate of customs duty for certain goods. A TCO can be applied for by any person by submitting an application to the Chief Executive Officer of Customs (CEO), who then determines whether the application meets the core criteria for concession. These criteria include ensuring that the goods in question are not specified as ineligible in section 269SJ and that no substitutable goods were produced in Australia at the time of the application, as defined by sections 269D, 269E, and 269F of the Act. Once the CEO is satisfied with the application, a TCO is issued, applying a specified lower rate of duty as outlined in Schedule 4 to the Customs Tariff Act 1995. The application process requires public notification to allow for any objections, although no objections were raised in the case of TCO No. 0719751. The TCO applies retroactively from the date of the application and does not impose any new liabilities on persons other than the Commonwealth, although it does entitle eligible importers to a refund of duties paid on the goods since that date.
Key Provisions
The main sections of this Tariff Concession Instrument No. 0719751, under the Customs Act 1901, outline the process and criteria for the application and granting of a Tariff Concession Order (TCO) (sections 269C, 269F, 269SJ, 269K, 269S, and 269P). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided these goods are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. The CEO must then decide if the application meets the core criteria as outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
The obligations imposed by the Act on parties or entities include ensuring that any application for a TCO is made in compliance with the statutory criteria, specifically that no substitutable goods were produced in Australia on the day of the application (section 269C). Additionally, the CEO has the obligation to publish a notice in the Gazette once an application is accepted as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). This notice ensures transparency and allows for public input, although in this case, no submissions were received.
In terms of penalties or consequences, the Act does not specify any particular offences, penalties, or civil/criminal consequences for breach of the TCO provisions. However, the granting of a TCO and the associated duty concessions are contingent upon strict adherence to the criteria set out in the Act. Failure to comply with these criteria could result in the CEO refusing to make a TCO, and any attempt to import the goods without proper concessions could lead to the imposition of the general rate of duty, as outlined in Schedule 4 to the Customs Tariff Act 1995. The TCO itself does not impose any new liabilities on any person but does provide potential benefits to importers in the form of duty refunds for goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations).