EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0826498
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.
Cp Mining Pty LTd applied for a TCO in respect of certain reverse osmosis desalination plant on 14 August 2008.
Instrument
TCO No 0826498 was made on 07 November 2008. It declares that those certain reverse osmosis desalination plant 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. 0826498 is taken to have come into force on 14 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. 0826498, enacted in 2008, amends the Customs Act 1901 by allowing for the reduction of customs duty on certain reverse osmosis desalination plants. This instrument was introduced to address the need for tariff concessions on specific goods that are not produced in Australia, thereby encouraging their importation and use. The Customs Act 1901, administered by the Commonwealth Parliament, provides a framework through which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) for goods that meet certain criteria, including the absence of substitutable goods produced domestically. The policy objective of this instrument is to support the importation of specialised goods that are not domestically manufactured, facilitating their availability and use in Australia. The instrument became effective from the date of application, 14 August 2008, and does not affect any pre-existing rights or impose liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0826498 applies to specific reverse osmosis desalination plants, which are the subject of an application for tariff concessions under the Customs Act 1901. This instrument is relevant to entities or individuals involved in the importation of these goods, aiming to provide a lower rate of customs duty by classifying these plants under a prescribed item in the Customs Tariff Act 1995. The instrument’s jurisdiction is national, operating within the framework of the Commonwealth of Australia. The legislation does not specify exclusions or exemptions beyond those outlined in section 269SJ of the Customs Act 1901, which excludes certain goods from tariff concession eligibility. The application of this instrument can be extended or restricted through subordinate instruments, although this specific case does not detail any such extensions or restrictions. The instrument comes into force on the date the application was lodged, in this case, 14 August 2008, and does not affect pre-existing rights or impose new liabilities on parties other than the Commonwealth.
Key Provisions
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0826498, allows for the application of a lower rate of customs duty on certain goods through the issuance of Tariff Concession Orders (TCOs). Under section 269F, an individual or entity can apply to the Chief Executive Officer of Customs (CEO) for a TCO in relation to specific goods. For the CEO to consider such an application, it must not pertain to goods listed in section 269SJ, which are ineligible for TCOs. The CEO then evaluates whether the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
The Act provides specific definitions to guide the CEO's evaluation. Section 269D defines "goods produced in Australia," section 269E defines "ordinary course of business," and section 269D defines "substitutable goods" in relation to the goods in question. If the CEO is satisfied that the application meets these criteria, they must make a written order (a TCO), as stipulated in section 269P(3). This written order declares that the goods in question are subject to a prescribed tariff item from Schedule 4 of the Customs Tariff Act 1995. In the case of Cp Mining Pty Ltd's application for a TCO on certain reverse osmosis desalination plants, the CEO determined that no substitutable goods were produced in Australia and subsequently issued TCO No. 0826498, applying a duty rate of free instead of the general rate of 5%.
The process for issuing a TCO involves certain obligations for the CEO. As per section 269K(1), once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be granted. In this instance, no submissions were received. The TCO itself comes into force on the date the application was lodged, in accordance with section 269S(1). Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) in a way that disadvantages them or imposes liabilities for actions taken before the TCO's registration. Importers of the affected goods may benefit from this arrangement by applying for a refund of duty on goods imported since the TCO's effective date, pursuant to paragraph 126(1)(r) of the Regulations.
Failing to comply with the requirements of the Customs Act 1901 or the conditions set out in a TCO can lead to various legal consequences. Breaches of the Act may result in both civil and criminal penalties, depending on the nature and severity of the violation. For instance, knowingly making a false statement or representation in an application for a TCO could result in criminal charges, with penalties that can include substantial fines and imprisonment. Civil penalties may also apply, where the breach results in financial loss to the Commonwealth or other parties. The specific penalties depend on the particular subsection of the Act that has been contravened and can range from fines to imprisonment terms as prescribed by the relevant sections of the Act.