EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0825423
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 exhaust ducting steel structure parts on 07 August 2008.
Instrument
TCO No 0825423 was made on 24 October 2008. It declares that those certain exhaust ducting steel structure 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 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. 0825423 is taken to have come into force on 07 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 Tariff Concession Instrument No. 0825423, enacted under the Customs Act 1901, was introduced to address the issue of facilitating trade by reducing customs duty on certain goods. Specifically, this instrument was designed to alleviate the financial burden on businesses importing particular goods by granting them tariff concessions. This process was enacted by the Chief Executive Officer of Customs, following an application by Origin Energy Power for certain exhaust ducting steel structure parts on August 7, 2008. The policy objective behind this instrument is to support economic efficiency and competitiveness by ensuring that Australian businesses can import goods more affordably, provided that no substitutable goods are produced in Australia. The instrument came into force on the same date the application was lodged, and it does not impose any liabilities on any person other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These TCOs apply to goods for which a lower rate of customs duty is mandated. Any person can apply for a TCO for goods that are not specified as ineligible under section 269SJ of the Act. The CEO must ensure that the application meets core criteria, particularly that no substitutable goods were produced in Australia on the day the application was lodged, as defined in sections 269C, 269D, 269E and 269F of the Act. If these criteria are satisfied, the CEO is required to issue a TCO. This legislative framework applies to the entire Commonwealth of Australia and can be further refined through subordinate instruments, ensuring flexibility and precision in its application. The rights of parties other than the Commonwealth are protected, ensuring no disadvantage or new liabilities arise from the TCO's enactment.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0825423 under the Customs Act 1901 (section 269P(3)) declare that certain exhaust ducting steel structure parts are subject to a lower rate of customs duty. Specifically, these parts are declared to be goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, with the general rate of duty being 5% but the rate for these goods being free due to the tariff concession. This effectively means that importers of these specific goods will not be required to pay customs duty on them, provided the terms of the TCO are met.
Entities or individuals governed by this Act must adhere to the requirement that they apply for a Tariff Concession Order (TCO) through the Chief Executive Officer of Customs (CEO) under section 269F. The CEO will assess the application against the core criteria set out in section 269C, which includes verifying that no substitutable goods were produced in Australia on the date the application was lodged. Substitutable goods are defined in section 269D as those that can be put to a use corresponding to that of the goods in question. If the CEO determines that the application meets these criteria, they are required to issue a written TCO. Importers must also be aware of the commencement date of the TCO, which is the date the application was lodged, and can apply for a refund of duty paid on imports since this date under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in various penalties. The Act does not specify exact penalties for breaches related to TCOs, but generally, non-compliance with customs regulations can lead to financial penalties, legal action, and potential criminal charges depending on the severity of the breach. For example, knowingly making a false statement or providing misleading information in an application for a TCO could lead to fines and imprisonment as per the general penalties outlined in the Customs Act 1901. Importers must ensure that their applications are accurate and complete to avoid any adverse consequences.
The obligations imposed on parties by this legislation include the requirement to apply for a TCO if they wish to benefit from a lower customs duty rate on specific goods. The CEO’s obligations include reviewing applications to ensure they meet the core criteria before issuing a TCO, and publishing notices in the Gazette to invite submissions from interested parties. Importers must ensure they import goods that are correctly classified under the terms of any applicable TCO to benefit from the reduced duty rates. Non-compliance with these obligations can lead to civil or criminal consequences, including financial penalties and potential imprisonment for serious breaches of customs regulations.