EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0801106
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.
H.T Engineering Pty Limited applied for a TCO in respect of certain glandless boiler circulating pump on 21 January 2008.
Instrument
TCO No 0801106 was made on 04 April 2008. It declares that those certain glandless boiler circulating pump 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. 0801106 is taken to have come into force on 21 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 Tariff Concession Instrument No. 0801106 was enacted in 2008 under the Customs Act 1901, to address the need for tariff concessions on specific goods. This legislation was introduced to facilitate the application of reduced customs duties on certain imported goods, in line with the provisions outlined in Part XVA of the Customs Act. The instrument was enacted by the Chief Executive Officer of Customs, in accordance with section 269F of the Act, following an application by H.T Engineering Pty Limited for a tariff concession order (TCO) on certain glandless boiler circulating pumps. The primary policy objective of this instrument is to ensure that the application of tariff concessions does not disadvantage existing Australian production or impose new liabilities on individuals or entities, while providing benefits to importers by potentially allowing for refunds of duties paid on imports of the specified goods since the effective date of the TCO.
Scope and Application
The Customs Act 1901, under Part XVA, establishes a scheme that enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which provide for lower rates of customs duty on specified goods. This Act applies to any person or entity that seeks to import goods eligible for tariff concessions. The scope of this legislation extends to all industries involved in the importation of goods that can benefit from reduced customs duties, provided the goods are not specified in section 269SJ as ineligible for such concessions. The TCOs have a national jurisdictional reach as they are part of the Commonwealth’s legislative framework. However, the Act does not impose any liabilities on individuals or entities other than the Commonwealth and does not affect pre-existing rights adversely. The application of the Act can be extended or specified further through subordinate instruments, such as regulations, which may detail additional criteria or processes for TCO applications. The Explanatory Statement for Tariff Concession Instrument No. 0801106 outlines the specific case where a TCO was granted for certain glandless boiler circulating pumps, effectively setting their customs duty rate to free, down from the general rate of 5%.
Key Provisions
The main operative sections of this legislation concern the establishment of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (sections 269C, 269F, 269P). Section 269F allows for the application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must make a written order (TCO) specifying the reduced rate of customs duty applicable to the goods (section 269P). This particular TCO, Instrument No. 0801106, was made in respect of certain glandless boiler circulating pumps, reducing the duty from the general rate of 5% to free (subsection 269P(3)).
The Customs Act 1901 imposes specific obligations on the CEO and applicants for TCOs. The CEO must first ensure that the application is not for goods that cannot be subject to a TCO as specified in section 269SJ. They must then determine whether the application meets the core criteria in section 269C, which involves verifying that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, section 269K requires the CEO to publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO. The CEO must also ensure that any TCO does not adversely affect the rights of persons other than the Commonwealth and does not impose liabilities on those persons in relation to actions taken before the TCO comes into force.
Failure to comply with the requirements of the Customs Act 1901 and associated regulations can result in civil or criminal penalties. While the explanatory statement does not specify the exact penalties, breaches of customs laws generally carry significant fines and potential imprisonment. For instance, knowingly making a false statement in a customs document, as might occur in the application process, can lead to fines of up to $22,000 for individuals and $110,000 for bodies corporate, along with potential imprisonment of up to two years under section 241 of the Customs Act 1901. Additionally, the CEO has the authority to impose penalties for non-compliance with customs regulations, which can further include substantial fines.
The TCO itself does not impose any liabilities on any person and does not affect the rights of persons other than the Commonwealth. It does, however, provide benefits to importers who can apply for refunds of duty on goods imported since the day the TCO came into force under paragraph 126(1)(r) of the Regulations. This mechanism ensures that importers who have already paid higher duties can seek reimbursement, thereby aligning the benefits of the TCO with the practical realities of the import process.