EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0824445
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.
Lionel Equipment Pty Ltd applied for a TCO in respect of certain synchronous ac motors on 01 August 2008.
Instrument
TCO No 0824445 was made on 24 October 2008. It declares that those certain synchronous ac motors 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. 0824445 is taken to have come into force on 01 August 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 Commonwealth Parliament, was amended to introduce Tariff Concession Orders (TCOs) as a mechanism to provide tariff relief on certain imported goods. This legislative change was introduced to address the problem of ensuring that Australian consumers and industries have access to competitively priced goods by reducing customs duties on items that are not produced domestically or for which there are no suitable Australian alternatives. The Explanatory Statement for Instrument No. 0824445, which was made under the Customs Act, illustrates this process by detailing how Lionel Equipment Pty Ltd successfully applied for a TCO concerning certain synchronous AC motors. The key policy objective here is to facilitate the importation of goods that are either not produced in Australia or for which no suitable Australian substitutes exist, thereby encouraging competition and providing cost benefits to Australian businesses and consumers.
Scope and Application
The Tariff Concession Instrument No. 0824445, made under Part XVA of the Customs Act 1901, applies to the Chief Executive Officer of Customs (CEO) and any person who applies for a Tariff Concession Order (TCO) in respect of specific goods. The instrument pertains to the reduction of customs duty for certain synchronous ac motors as applied by item 50 of Schedule 4 to the Customs Tariff Act 1995. The legislation ensures that if the CEO determines that no substitutable goods were produced in Australia at the time the TCO application was lodged, a lower rate of duty, in this case free, can be applied to the specified goods. The geographic and jurisdictional reach of this Act is federal, with the CEO having the authority to make these orders. There are no exclusions or exemptions specified for this particular TCO, and it is applicable only to the goods for which the application was made. The Act may extend or restrict application through subordinate instruments, although in this specific case, no further instruments have been noted to alter its scope. The instrument ensures that the rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for Tariff Concession Orders (TCOs) under section 269F, allowing for the reduction of customs duty on specific goods. An applicant may submit an application for a TCO to the Chief Executive Officer of Customs (the CEO). If the application is valid and does not pertain to goods specified in section 269SJ, the CEO evaluates whether the application meets the core criteria under section 269C. Specifically, the CEO must be satisfied that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E.
Upon meeting these criteria, the CEO is required under subsection 269P(3) to issue a written order (a TCO) that specifies the application's details and the corresponding tariff item from Schedule 4 of the Customs Tariff Act 1995. In the case of TCO No. 0824445, certain synchronous ac motors are subject to a zero duty rate, as opposed to the general rate of 5%. The CEO is also obligated under subsection 269K(1) to publish a notice in the Gazette, inviting submissions from interested parties opposing the TCO. In this instance, no submissions were received.
The TCO itself, as per subsection 269S(1), is effective from the date the application was lodged, which is 01 August 2008 for TCO No. 0824445. This date is critical as it determines the period from which the reduced duty rate applies and the eligibility for duty refunds under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not affect any pre-existing rights or impose liabilities on any person other than the Commonwealth, ensuring that no party is disadvantaged by its implementation.