EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800660
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.
Melbourne Water Corporation Pty Ltd applied for a TCO in respect of certain electrical distribution substations on 11 January 2008.
Instrument
TCO No 0800660 was made on 4 April 2008. It declares that those certain electrical distribution 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. 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. 0800660 is taken to have come into force on 11 January 2008.
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, including the imposition of customs duty. It provides a framework under which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) to reduce or eliminate customs duty on specific goods. This is done to encourage the importation of goods that are not produced domestically, thereby supporting economic efficiency and consumer choice. In 2008, the Customs Act was amended to allow for the concession of tariff on certain electrical distribution substations, addressing a gap in the availability of competitively priced essential infrastructure components. The concession aims to benefit importers by potentially reducing their duty costs and ensuring that critical infrastructure can be sourced at lower prices, as reflected in Tariff Concession Instrument No. 0800660 made on 4 April 2008. This instrument declared that certain electrical distribution substations would be subject to a free rate of duty, as no substitutable goods were produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0800660, made under the Customs Act 1901, applies to the specific electrical distribution substations for which Melbourne Water Corporation Pty Ltd applied, granting them a concessional rate of customs duty. The Act allows for Tariff Concession Orders (TCOs) to be issued by the Chief Executive Officer of Customs when certain conditions are met, such as the absence of substitutable goods being produced in Australia. This particular TCO was made on 4 April 2008 and became effective from 11 January 2008, the date the application was lodged. It provides a zero rate of duty for these substations, whereas the general rate is 5%. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Importers will be able to apply for a refund of duty on goods imported since the effective date of the TCO. The scope of the Act is further extended through subordinate instruments, which may elaborate on the specifics of TCO applications, criteria, and procedures.
Key Provisions
The Tariff Concession Instrument No. 0800660, pursuant to the Customs Act 1901, allows for a reduced rate of customs duty on specified goods. Specifically, section 269F of the Act outlines the process by which a person can apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C of the Act stipulates that a TCO application meets the core criteria if, at the time of application, no substitutable goods were produced in Australia in the ordinary course of business. This is further defined by sections 269D and 269E, which clarify what constitutes "goods produced in Australia" and "ordinary course of business," respectively. Once the CEO is satisfied that the application meets these criteria, they must issue a written TCO as per section 269P(3) of the Act.
The obligations under the Customs Act 1901 for entities and individuals applying for or affected by a TCO include the requirement to ensure that no substitutable goods are produced in Australia as per section 269C. Additionally, section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not proceed. This ensures transparency and provides an opportunity for public consultation. Furthermore, section 269S(1) specifies that a TCO comes into effect on the date the application is lodged, thereby ensuring that the benefits of the concession are available from the application date.
Should there be any breach of the conditions set out in the Tariff Concession Instrument, the Customs Act 1901 provides for various civil and criminal penalties. Section 269U of the Act specifies that any person who makes a false or misleading statement in an application for a TCO is liable to a penalty. This penalty can be substantial, reflecting the seriousness of providing false information to the CEO. Additionally, section 269X of the Act imposes penalties for any misuse of the TCO, which can include fines and, in severe cases, imprisonment. These provisions underscore the importance of compliance with the requirements set out in the TCO and the Act.