EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0812758
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.
Origin Energy applied for a TCO in respect of certain gas turbine exhaust duct components on 13 June 2008.
Instrument
TCO No 0812758 was made on 22 August 2008. It declares that those certain gas turbine exhaust duct components 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. 0812758 is taken to have come into force on 13 June 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, facilitates the implementation of Tariff Concession Orders (TCOs) to provide relief on customs duties for certain imported goods, thereby addressing the gap in duty-free access to specific products not produced locally. This legislation allows for the application process for TCOs to be initiated by interested parties, subject to review by the Chief Executive Officer of Customs, who must ascertain that no substitutable goods are produced in Australia. The policy objective of this Act is to support industries by reducing the cost of imported goods, thus enhancing competitiveness and encouraging trade. The Explanatory Statement for Tariff Concession Instrument No. 0812758, made on 22 August 2008, outlines the application of a TCO to certain gas turbine exhaust duct components, resulting in a reduction of the duty rate from 5% to free, effective from the date of the application, 13 June 2008.
Scope and Application
The Customs Act 1901, as amended, facilitates the granting of Tariff Concession Orders (TCOs) through its Part XVA, empowering the Chief Executive Officer of Customs (CEO) to apply reduced customs duties on specific goods, provided certain criteria are met. This legislative instrument is applicable to any person or entity seeking to import goods that qualify under the conditions of a TCO. The primary application of this legislation is industry-specific, particularly targeting sectors that rely on imported components, such as the energy sector as evidenced by Origin Energy’s application for gas turbine exhaust duct components. Geographically, the Act operates under the Commonwealth jurisdiction, impacting all states and territories within Australia. The Act excludes certain goods from eligibility for a TCO as specified in section 269SJ, which outlines goods that cannot benefit from tariff concessions. The CEO must ensure that the application does not pertain to these excluded goods and that no substitutable goods are produced in Australia, as defined by section 269D and 269E. This legislative framework may be further refined or extended through subordinate instruments, allowing for more specific applications or exclusions to be determined by the CEO.
Key Provisions
The main operative sections of the Customs Act 1901, particularly sections 269C, 269B, and 269F, outline the process by which Tariff Concession Orders (TCOs) can be applied for and granted. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act. The CEO must then determine if the application meets the core criteria as stipulated in section 269C, which requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B further defines key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the application meets these criteria, the CEO must issue a TCO under section 269P(3) specifying that the goods in question are subject to a lower rate of customs duty as prescribed in the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on both the applicant and the CEO. The applicant must ensure that their application is made in accordance with section 269F and that it pertains to goods that are eligible under the scheme. They must also provide sufficient evidence to demonstrate that the goods meet the criteria outlined in sections 269C, 269B, and 269D. The CEO, on the other hand, is required to assess the application promptly and determine if it meets the core criteria. If satisfied, the CEO must make a written TCO as specified in section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons to oppose the TCO. This transparency measure ensures that all stakeholders have an opportunity to voice their concerns before a decision is made.
Under the Customs Act 1901, breaches or non-compliance with the provisions of a TCO may lead to various civil or criminal consequences. However, the specific penalties are not detailed within the explanatory statement. Typically, under Australian law, penalties for breaches of customs regulations can include fines and, in severe cases, imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as any relevant case law or subsequent legislative amendments. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and it does not impose any new liabilities on any person. Importers, however, may benefit from applying for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations.