EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800990
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.
Electric Systems Pty Ltd applied for a TCO in respect of certain pressure transformer relays on 17 January 2008.
Instrument
TCO No 0800990 was made on 28 March 2008. It declares that those certain pressure transformer relays 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. 0800990 is taken to have come into force on 17 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 Parliament of Australia, provides a framework for the administration of customs and excise in Australia. Specifically, Part XVA of the Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on certain goods, provided they meet specific criteria outlined in the Act. The problem or gap that the TCO scheme was introduced to address includes the need to facilitate the import of goods that are not produced domestically, thereby encouraging trade and economic activity by reducing the cost of importing such goods. Tariff Concession Instrument No. 0800990, made under this Act, grants a tariff concession for certain pressure transformer relays, reducing the customs duty on these goods from 5% to free, effective from the date the application was lodged on 17 January 2008. The policy objective of this instrument is to support the import of goods that cannot be substitutively produced in Australia, thereby benefiting importers and potentially stimulating demand and innovation in the relevant sector.
Scope and Application
The Tariff Concession Instrument No. 0800990 under the Customs Act 1901 applies to specific goods, namely certain pressure transformer relays, for which Electric Systems Pty Ltd applied on 17 January 2008. The application was made by a person or entity seeking a lower rate of customs duty on these goods, contingent on satisfying the core criteria stipulated in section 269C of the Act. This process is overseen by the Chief Executive Officer of Customs, who must ensure that no substitutable goods were produced in Australia on the day the application was lodged, as defined in sections 269D and 269E of the Act. Once the CEO determines that the application meets these criteria, a Tariff Concession Order (TCO) is issued, as per section 269P(3), effectively reducing the customs duty from 5% to free for these specified goods. The geographic and jurisdictional reach of this Act is national, as it pertains to the importation of goods into Australia. The Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on persons other than the Commonwealth for actions taken prior to the issuance of the TCO. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on these goods imported since the TCO is deemed to have come into force on 17 January 2008, in line with the provisions of the Customs (Tariff) Regulations 1994.
Key Provisions
The Customs Act 1901 (the Act), particularly as it pertains to Tariff Concession Orders (TCOs), allows the Chief Executive Officer of Customs (the CEO) to reduce customs duty rates on certain goods, provided specific criteria are met (sections 269C, 269D, 269E, 269F, 269SJ, 269P). A TCO application can be made by any person under section 269F, but it must not concern goods listed in section 269SJ, which are ineligible for TCOs. The CEO must ensure that no substitutable goods were produced in Australia on the day the application was lodged, as outlined in section 269C. If these conditions are satisfied, the CEO is obligated to issue a written TCO, as per subsection 269P(3).
The obligations imposed by the Act on parties involve ensuring that any goods subject to a TCO application are not substitutable by locally produced goods. Specifically, under section 269D, the term 'goods produced in Australia' is defined, while 'ordinary course of business' and 'substitutable goods' are further clarified in sections 269E and 269F respectively. Any applicant must substantiate that no locally produced goods can serve as a substitute for the imported goods in question. Furthermore, as per subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions on the TCO application, although no submissions were received in the case of Tariff Concession Instrument No. 0800990.
In terms of consequences, the Act does not specify any penalties for breaches related to TCOs. However, if a TCO is issued incorrectly, it could lead to the imposition of duties retroactively, or other administrative actions by the CEO. The rights of importers are protected such that the TCO does not disadvantage them or impose liabilities for actions taken before the TCO's registration date, as stipulated in subsection 269S(1). This means that the TCO's benefits, such as the potential for duty refunds under paragraph 126(1)(r) of the Regulations, apply from the date the TCO is taken to have come into force, which is the date of the application for the TCO.