EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0824041
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 Power applied for a TCO in respect of certain pulse jet filter parts on 31 July 2008.
Instrument
TCO No 0824041 was made on 24 October 2008. It declares that those certain pulse jet filter parts 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 10%. 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. 0824041 is taken to have come into force on 31 July 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 to provide for the regulation of customs and excise duties and includes provisions for Tariff Concession Orders (TCOs). The problem or gap this legislation addresses is the need for a scheme under which lower rates of customs duty can be applied to certain goods, thereby promoting trade and economic efficiency by reducing the cost of importing specific items. This is achieved through the process outlined in Part XVA of the Act, where the Chief Executive Officer of Customs can grant TCOs to applicants if certain criteria are met. The policy objective of this scheme is to facilitate the importation of goods that are not produced in Australia by providing tariff concessions, which can help in promoting competition and consumer choice. This particular legislation, Tariff Concession Instrument No. 0824041, was introduced by the relevant legislature, the Parliament of Australia, to provide a tariff concession for certain pulse jet filter parts, reducing their duty rate from 10% to free, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, as augmented by Tariff Concession Instrument No. 0824041, applies to any person or entity seeking to import goods that qualify for tariff concessions under the Act. Specifically, the Instrument pertains to certain pulse jet filter parts, which are designated to benefit from a zero-rate customs duty, previously at 10%, as a result of a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs. This Act operates within the Commonwealth jurisdiction and is applicable across Australia, facilitating the streamlined importation of specified goods without incurring customs duty charges. The application of this legislation is subject to certain exclusions, particularly those goods outlined in section 269SJ of the Act, which are ineligible for tariff concessions. Additionally, the Act may be further refined or expanded through subordinate instruments, enabling the detailed regulation of which goods qualify for tariff concessions and the specific terms of such concessions.
Key Provisions
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer (CEO) of Customs (sections 269C, 269F, 269SJ). If an application for a TCO is made under section 269F and the CEO determines it is valid and not in respect of goods specified in section 269SJ, they must assess whether the application meets the core criteria outlined in section 269C. This assessment hinges on whether, on the date of the application, there are no substitutable goods produced in Australia in the ordinary course of business (section 269C(1)(a)). Definitions for "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269D, 269E, and 269P respectively. If the application meets these criteria, the CEO must issue a written order, known as a TCO, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods (subsection 269P(3)).
The obligations imposed on the parties governed by this Act include ensuring that applications for TCOs are made in accordance with section 269F and that all relevant criteria specified in section 269C are satisfied. Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from any interested parties who might have objections to the TCO being issued (subsection 269K(1)). This publication is to occur as soon as practicable after accepting the TCO application as valid. The CEO must also ensure that any TCO issued does not adversely affect the rights of persons other than the Commonwealth regarding actions taken prior to the registration of the TCO (subsection 269S(1)).
Should the CEO fail to comply with the requirements stipulated in the Act, or if a party fails to adhere to the obligations outlined, there could be significant legal consequences. While the Explanatory Statement does not detail specific offences or penalties for breaches, under the broader Customs Act 1901, penalties for non-compliance can be severe and include substantial fines and imprisonment. The maximum penalties vary depending on the specific breach but can include fines up to $22,000 and/or imprisonment for up to five years for individuals, and higher penalties for corporate entities. Furthermore, any failure to adhere to the provisions regarding the publication of notices or the issuance of TCOs could result in civil consequences such as financial penalties or legal actions to enforce compliance.