EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0802281
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.
Nexus Energy Limited applied for a TCO in respect of certain gate valves on 11 February 2008.
Instrument
TCO No 0802281 was made on 18 April 2008. It declares that those certain gate valves 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. 0802281 is taken to have come into force on 11 February 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 Parliament of Australia to facilitate trade by providing a framework for the collection of customs duty on imported goods. The Act includes provisions for Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on certain goods. The problem or gap addressed by this legislation is the potential for unfair economic disadvantages faced by businesses that rely on imported goods, especially when suitable substitutes are not produced domestically. The policy objective is to encourage trade and economic efficiency by reducing the cost of imported goods that are not readily available locally. Tariff Concession Instrument No. 0802281 was introduced to provide a tariff concession for specific gate valves, effectively reducing the customs duty on these goods from 5% to free, thereby facilitating cheaper access to these critical components for industries that depend on them.
Scope and Application
The Tariff Concession Instrument No. 0802281, made under the Customs Act 1901, applies to the concession of customs duty for certain gate valves that Nexus Energy Limited applied for on 11 February 2008. The Act enables the Chief Executive Officer of Customs to reduce the duty on specified goods if it is determined that no substitutable goods are produced in Australia in the ordinary course of business. The instrument, effective from 11 February 2008, declares that the gate valves in question are subject to a free rate of duty instead of the general rate of 5%, as no substitutable goods were produced domestically. The CEO published a notice inviting objections to the TCO in the Gazette but received none, thereby allowing the concession to proceed. This instrument does not retroactively affect any rights or impose new liabilities on persons other than the Commonwealth.
Key Provisions
The Customs Act 1901 (the Act) under which the Tariff Concession Instrument No. 0802281 was made, includes several key provisions. Section 269F of the Act enables a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, they 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) applies (subsection 269P(3)).
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to assess whether a TCO application meets the core criteria set out in section 269C. If the application is valid and meets these criteria, the CEO must issue a TCO. Section 269K(1) mandates that the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. This ensures transparency and provides an opportunity for public input.
Failure to comply with the requirements of the Act may result in civil or criminal consequences. Under subsection 269S(1), a TCO is taken to have come into force on the day on which the application for the TCO was lodged. If a person contravenes the provisions of the Act, they may face penalties, though the maximum penalties are not specified in the provided text. The Act does not impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration of the TCO, protecting persons other than the Commonwealth from disadvantages or liabilities related to the TCO.