EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803685
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.
Grundfos Pumps Pty Ltd applied for a TCO in respect of certain cold water tanks on 06 March 2008.
Instrument
TCO No 0803685 was made on 16 May 2008. It declares that those certain cold water tanks 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. 0803685 is taken to have come into force on 06 March 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 Australian Parliament, provides for the establishment of a tariff concession scheme to facilitate trade and economic efficiency. This scheme allows for the reduction or exemption of customs duties on certain goods through the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The Act aims to address the gap in trade facilitation by enabling duty-free or reduced-duty imports where no substitutable goods are produced in Australia. Tariff Concession Instrument No. 0803685, made on 16 May 2008, exemplifies this process by granting a TCO for specific cold water tanks, reducing their duty from 5% to free, as no substitutable goods were produced in Australia. This instrument was introduced following an application by Grundfos Pumps Pty Ltd on 6 March 2008 and followed the requisite legislative and procedural requirements, including publication of the application in the Gazette with no objections received.
Scope and Application
The Tariff Concession Instrument No. 0803685 under the Customs Act 1901 applies to the specific goods for which Grundfos Pumps Pty Ltd made an application, namely certain cold water tanks. The Act mandates that a Tariff Concession Order (TCO) can be made by the Chief Executive Officer of Customs if the application meets the core criteria, which includes ensuring that no substitutable goods are produced in Australia at the time the application is lodged. This instrument, which came into effect on 6 March 2008, reduces the duty on these particular cold water tanks from the general rate of 5% to free, thereby benefiting importers who can apply for refunds of duties paid on these goods since the effective date of the concession. The Act’s scope encompasses the process by which applications are assessed, the criteria for making TCOs, and the publication of notices to allow for objections, although in this case, no submissions were received. The TCO is limited to the specified goods and does not impose any new liabilities or affect existing rights adversely.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0803685 under the Customs Act 1901 (section 269F) allow for the application to the Chief Executive Officer of Customs (section 269P) for a Tariff Concession Order (TCO) in respect of goods, provided that the goods are not specified in section 269SJ and that the application meets the core criteria (section 269C). If the CEO is satisfied that the application meets these criteria, a TCO is made under section 269P(3) that declares the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. In this case, certain cold water tanks have been declared as goods to which item 50 of Schedule 4 applies, thereby attracting a duty rate of free instead of the general rate of 5%.
Under this legislation, the CEO has a duty to consider applications for TCOs, which involves determining whether the core criteria have been met (section 269C). If the CEO is satisfied that the application meets these criteria, they are required to make a TCO (section 269P(3)). Moreover, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid one (subsection 269K(1)), inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. In this instance, the CEO did not receive any submissions in response to the invitation.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could result in legal consequences. The Act does not specify particular offences or penalties for failing to comply with the TCO provisions. However, general provisions of the Customs Act may apply to breaches, which could include civil or criminal penalties, including fines and imprisonment. The exact penalties would depend on the nature and severity of the breach.
The TCO does not affect the rights of any 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. However, it does beneficially affect the rights of importers, who 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 (paragraph 126(1)(r) of the Regulations). The TCO does not impose any liabilities on any person.