EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0720625
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.
Alinta applied for a TCO in respect of certain power generation set on 3 December 2007.
Instrument
TCO No 0720625 was made on 29 February 2008. It declares that those certain power generation set 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. 0720625 is taken to have come into force on 3 December 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 was enacted by the Commonwealth Parliament to provide a comprehensive framework for the administration of customs and excise duties in Australia. One of its key features is the ability for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) under Part XVA, which provide for lower rates of customs duty on certain goods. This mechanism was introduced to address the problem of ensuring that Australian industries can access necessary goods at competitive rates, particularly where these goods are not produced domestically or where domestically produced substitutes do not exist. The Tariff Concession Instrument No. 0720625, made in 2008, is an example of this process in action. In this instance, Alinta applied for a TCO for specific power generation sets, which was granted as no substitutable goods were produced in Australia, resulting in a duty rate of free instead of the general 5%. The instrument's policy objective aligns with fostering competitive imports, thereby supporting industry needs and economic efficiency.
Scope and Application
The Tariff Concession Instrument No. 0720625 applies to specific power generation sets, providing a concession under the Customs Act 1901 to the entity Alinta, which applied for the concession on 3 December 2007. The Act applies to any person or entity that applies for a Tariff Concession Order (TCO) for goods not produced in Australia in the ordinary course of business. The instrument was made on 29 February 2008 by the Chief Executive Officer of Customs, who was satisfied that no substitutable goods were produced in Australia for the power generation sets in question. The geographic reach of the Act is Commonwealth, as it pertains to customs duties and concessions under the federal Customs Act. The TCO applies the free rate of duty to the specified power generation sets, replacing the general rate of 5%. Any person considering opposition to the TCO could submit to the CEO, but none did in this case. The TCO is effective from the date the application was lodged, 3 December 2007, and does not disadvantage any person or impose new liabilities on anyone, although importers may apply for a refund of duties paid on the goods since that date.
Key Provisions
The main operative sections of the Customs Act 1901, particularly as they relate to Tariff Concession Orders (TCOs), include sections 269C, 269B, 269E, 269D, 269F, and 269P. Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO determines that the application meets the core criteria, outlined in section 269C, which involves ensuring that no substitutable goods were produced in Australia on the day the application was lodged, a TCO can be issued. Section 269B defines 'goods produced in Australia' and 'ordinary course of business', while section 269E specifies the meaning of 'substitutable goods'. Section 269P mandates that if the CEO is satisfied with the application, a written order, the TCO, must be made.
The Act imposes several obligations on the parties involved. The CEO of Customs has the responsibility to decide whether an application for a TCO meets the core criteria and, if so, to issue the TCO. The applicant must ensure their application is valid and does not pertain to goods specified in section 269SJ of the Act, which are ineligible for TCOs. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be made, as outlined in subsection 269K(1). In this instance, no submissions were received, facilitating the issuance of TCO No. 0720625.
The Customs Act 1901 includes provisions for offences, penalties, and civil/criminal consequences for breaches. While the explanatory statement does not detail specific penalties, it is reasonable to infer that breaches of the Act could result in fines or other penalties as prescribed under the relevant sections of the Act. For example, unauthorised importation of goods or fraudulent applications for TCOs could be subject to significant penalties under the Customs Act and associated regulations. The exact penalties would depend on the nature and severity of the breach, with potential maximum penalties varying according to the specific offence.
In summary, the Customs Act 1901, particularly through sections 269C, 269B, 269E, 269D, 269F, and 269P, establishes the framework for the creation of Tariff Concession Orders. These orders can provide significant tariff benefits to importers if the CEO determines that the core criteria are met and no substitutable goods are produced in Australia. The Act outlines the obligations of the CEO and applicants, including the requirement for public notice and the opportunity for submissions. While the explanatory statement does not detail specific penalties, breaches of the Act could lead to civil or criminal consequences, including fines, reflecting the seriousness of non-compliance with the regulatory framework.