EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721698
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.
Aquatec Maxcon Pty Ltd applied for a TCO in respect of certain aerator drives on 17 December 2007.
Instrument
TCO No 0721698 was made on 07 March 2008. It declares that those certain aerator drives 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 10%. 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. 0721698 is taken to have come into force on 17 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 Australian Parliament to regulate the importation and exportation of goods into and out of Australia, among other things. In response to specific economic needs and to support industry, the Act was amended to include provisions for Tariff Concession Orders (TCOs), which were introduced to address gaps in the availability of certain goods within Australia. The purpose of these concessions is to provide a lower rate of customs duty on goods that are not produced domestically, thereby supporting industry and consumers by making these goods more affordable. Tariff Concession Instrument No. 0721698, made on 7 March 2008, is an example of such a concession, allowing for the importation of certain aerator drives without incurring the general rate of duty, thus facilitating their availability and affordability in the market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism allows for a reduced rate of customs duty on goods that are the subject of a TCO. The process begins with an application by a person to the CEO, who must determine if the application complies with the core criteria, including the absence of substitutable goods produced in Australia at the time of application. If the CEO is satisfied that the application meets these criteria, they must issue a written order, effectively a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. The application of this Act extends across the Commonwealth and applies to any person or entity seeking a tariff concession for specified goods, provided such goods are not those listed in section 269SJ of the Act, which are ineligible for a TCO. The geographic reach of this legislation is national, and it does not impose any liabilities on any person, ensuring that the rights of importers will be positively affected by the tariff concessions granted.
Key Provisions
The Customs Act 1901, as amended, facilitates the creation of Tariff Concession Orders (TCOs) under Part XVA, providing for reduced customs duty rates on specified goods (sections 269C, 269F, 269P(3)). This legislative provision allows an applicant, such as Aquatec Maxcon Pty Ltd, to apply to the Chief Executive Officer of Customs (CEO) for a TCO. If the CEO determines that the application meets the core criteria, which include verifying that no substitutable goods are produced in Australia in the ordinary course of business, the CEO must issue a written TCO (section 269C). The TCO instrument, TCO No. 0721698, declares that certain aerator drives are subject to a free duty rate, which contrasts with the general duty rate of 10% (section 269P(3)).
The obligations imposed by this Act on the CEO and applicants include the thorough evaluation of TCO applications to ensure they meet the specified criteria, including the absence of substitutable goods produced in Australia. The CEO must also publish a notice in the Gazette inviting public submissions on the application, although in the case of TCO No. 0721698, no submissions were received (subsection 269K(1)). Once a TCO is made, it comes into effect on the date the application was lodged, in this instance, 17 December 2007 (subsection 269S(1)). The TCO does not retroactively affect the rights of any person other than the Commonwealth, ensuring that the rights of importers are positively influenced by allowing them to apply for duty refunds for goods imported since the TCO's effective date.
Any breaches of the conditions set out in the TCO or the Customs Act may lead to legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of the Customs Act generally could result in civil or criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach. The maximum penalties for offences under the Customs Act can vary, but they are designed to deter non-compliance and enforce the proper application of duty rates as specified by legislation and TCOs.