EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800664
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 applied for a TCO in respect of certain water treatment plant on 11 January 2008.
Instrument
TCO No 0800664 was made on 04 April 2008. It declares that those certain water treatment plant 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. 0800664 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, enacted by the Commonwealth Parliament, establishes a framework for the administration of customs duties and provides mechanisms for tariff concessions. Specifically, Part XVA of the Act outlines the process for making Tariff Concession Orders (TCOs) which can reduce the customs duty on certain goods. This legislative instrument addresses the need for a streamlined process to grant tariff concessions, ensuring that the application of lower customs duties is both fair and targeted to those who meet specified criteria. The objective is to facilitate the import of goods where no suitable Australian-made alternatives exist, thereby supporting industries that rely on imported components or materials.
The Tariff Concession Instrument No. 0800664, made on 4 April 2008, applies to a specific type of water treatment plant, reducing the customs duty from 5% to free. This concession was granted after Melbourne Water Corporation applied for the order on 11 January 2008, and the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia. The instrument was published in the Gazette, inviting objections, but none were received. The TCO took effect from the date of the application, providing beneficial rights to importers who can now apply for duty refunds on goods imported since 11 January 2008.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism allows for the application of a lower rate of customs duty on certain goods, provided that the application meets specific criteria. An application for a TCO is eligible if the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. Moreover, the application must meet the core criteria outlined in section 269C of the Act, which requires that no substitutable goods were produced in Australia at the time of application, as defined in section 269D and 269E. This geographic reach applies nationally across Australia, and the application process is open to any person or entity that qualifies under these conditions. Notably, the Act does not specify any exclusions or exemptions beyond those mentioned, and the application of TCOs is not extended or restricted by subordinate instruments. The implementation of TCO No. 0800664 for water treatment plant, effective from 11 January 2008, exemplifies the application of this legislation, benefiting importers by allowing them to apply for a refund of duty on these goods from the date the TCO was taken to have come into force.
Key Provisions
The main operative sections of this legislation, found in Part XVA of the Customs Act 1901, concern the establishment of Tariff Concession Orders (TCOs) and the process for their creation (sections 269C, 269F, 269K, 269P, and 269S). These sections provide that a TCO may be applied for by any person and, if certain criteria are met, the Chief Executive Officer of Customs (CEO) must grant it. The CEO must be satisfied that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO, and that no substitutable goods are produced in Australia on the date the application was lodged (section 269C). A TCO is made in the form of a written order which specifies the goods and the tariff rate applying to them, as set out in Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)). A TCO comes into force on the date the application for it is lodged (section 269S(1)).
The Customs Act 1901 imposes obligations on the CEO to consider TCO applications and to make a written order if the application meets the core criteria (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions on the application as soon as practicable after accepting it as a valid application (subsection 269K(1)). The CEO must consider any submissions received before making a decision on the application. In the case of Tariff Concession Instrument No. 0800664, the CEO did not receive any submissions. In addition, the Act imposes an obligation on importers to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
The Customs Act 1901 provides for offences and penalties for breaches of the Act or the Regulations. However, the Explanatory Statement does not specify the exact nature of these offences or the penalties that apply. In general, penalties for breaches of the Customs Act 1901 can include fines, imprisonment, or both, depending on the seriousness of the offence. For example, section 245 of the Act provides for a maximum penalty of 10 years imprisonment for importing goods in contravention of the Act or the Regulations. Section 252 provides for a maximum penalty of 12 months imprisonment or a fine of up to $22,200, or both, for breaches of the Act or the Regulations relating to the payment of duty or tax. However, it is not clear from the Explanatory Statement whether these or any other penalties apply to breaches of the Tariff Concession Instrument No. 0800664 specifically.