EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0810687
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.
Hvacr Supplies Pty Ltd applied for a TCO in respect of certain air conditioning ball valves on 30 May 2008.
Instrument
TCO No 0810687 was made on 22 August 2008. It declares that those certain air conditioning ball 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. 0810687 is taken to have come into force on 30 May 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, outlines the framework for the imposition and administration of customs duties. To address the need for tariff concessions that can stimulate trade and economic growth, Part XVA of the Act allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs). These orders provide for lower rates of customs duty on specified goods, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. The 2008 Tariff Concession Instrument No. 0810687, for example, was introduced to offer a tariff concession on certain air conditioning ball valves, reducing the duty rate from 5% to free. The policy objective is to encourage trade and investment by making imported goods more competitive, thereby benefiting importers who can now apply for duty refunds on eligible goods imported since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the framework for Tariff Concession Orders (TCOs) which can be applied for by any person seeking a lower rate of customs duty on specified goods. The process involves an application to the Chief Executive Officer of Customs (CEO), who must determine whether the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business. This criterion is defined by the Act, with particular attention to the definitions of 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods'. If the CEO is satisfied that the application meets these criteria, they must issue a written order as a TCO, effectively applying a prescribed lower tariff rate on the specified goods. This mechanism ensures that Australian importers of certain goods can benefit from reduced customs duties, provided the goods in question are not already produced domestically. The geographic reach of this legislation is national, applying across all states and territories of Australia, and it does not impose any new liabilities on individuals or entities, nor does it disadvantage existing rights as of the date of registration. The application process includes a public notice period to allow any interested party to submit objections, although in the case of TCO No. 0810687, no such objections were received.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0810687 under the Customs Act 1901 (sections 269C, 269B, 269D, 269E, 269F, 269P(3), and 269SJ) provide a framework for the creation of Tariff Concession Orders (TCOs). These sections outline the criteria for determining whether a TCO can be applied to certain goods, specifically focusing on the production of substitutable goods in Australia and the use of the goods in question. For instance, section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the date the application was lodged. Furthermore, section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO regarding specific goods, provided those goods are not listed in section 269SJ, which details goods that cannot be subject to a TCO.
The Act imposes several obligations and requirements on parties involved. Firstly, the CEO must assess whether the application for a TCO meets the core criteria, as specified in sections 269C and 269F. This assessment includes verifying that no substitutable goods were produced in Australia in the ordinary course of business on the application date, which is defined in sections 269D and 269E. If the CEO is satisfied that the application meets these criteria, they are mandated to make a written TCO, as per section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not proceed, in accordance with section 269K(1).
Failing to comply with the provisions of the Customs Act 1901 may result in various consequences. While the explanatory statement does not detail specific offences or penalties within the TCO framework, breaches of the Customs Act generally can lead to both civil and criminal penalties. For example, under section 246 of the Act, a person who knowingly imports goods in contravention of the Act may be subject to a penalty of up to $22,200 or imprisonment for up to two years, or both, for a first offence. For subsequent offences, the penalties can be significantly higher, reflecting the seriousness of non-compliance with customs regulations.
In summary, the Tariff Concession Instrument No. 0810687 provides a structured approach for the creation of TCOs under the Customs Act 1901, with specific sections defining the criteria and processes involved. The CEO’s role is pivotal in assessing applications and making TCOs, while the publication of notices in the Gazette ensures transparency and the opportunity for stakeholder input. Non-compliance with the Act's provisions can result in substantial penalties, reinforcing the importance of adhering to the outlined regulations.