EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0826801
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 Pty Ltd applied for a TCO in respect of certain fuel gas coalescing filter unit on 18 August 2008.
Instrument
TCO No 0826801 was made on 07 November 2008. It declares that those certain fuel gas coalescing filter unit 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. 0826801 is taken to have come into force on 18 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 was enacted to provide for the imposition of customs duty and the regulation of imports and exports. To address the issue of high tariffs on goods that are not produced in Australia, the Act was amended to include a scheme for Tariff Concession Orders (TCOs). These orders allow for a lower rate of customs duty on certain goods if it is determined that no substitutable goods are produced in Australia. The Tariff Concession Instrument No. 0826801 was introduced to provide tariff concessions for certain fuel gas coalescing filter units, which were found to not have substitutable goods produced domestically, thus reducing the duty from the general rate of 5% to free. The instrument was made by the Chief Executive Officer of Customs and is intended to benefit importers by potentially allowing them to apply for a refund of duty on imports since the TCO came into force on 18 August 2008.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines a framework through which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. This provision applies to any person or entity seeking a lower rate of customs duty for goods by submitting an application to the CEO. The geographic reach of this legislation is national, as it pertains to the Customs Act 1901 which is a Commonwealth Act. The application process requires that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. If the CEO determines that the application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia in the ordinary course of business, a TCO is issued. The order then applies a prescribed rate of duty from Schedule 4 to the Customs Tariff Act 1995, as demonstrated by TCO No. 0826801 which was issued on 7 November 2008 for certain fuel gas coalescing filter units, setting the duty rate at free instead of the general 5%. The TCO does not affect pre-existing rights or impose new liabilities on any person aside from the Commonwealth, and the rights of importers are positively impacted, allowing for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0826801 is a significant legislative instrument under the Customs Act 1901, specifically addressing the application of Tariff Concession Orders (TCOs) for certain goods. The main operative sections involved here include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269K, which collectively outline the criteria and process for applying for and making a TCO. For instance, Section 269C stipulates that a TCO application meets the core criteria if, at the time of application, no substitutable goods are produced in Australia in the ordinary course of business. Section 269F allows a person to apply to the CEO for a TCO in respect of goods, provided the goods are not specified in Section 269SJ of the Act. Upon satisfying these criteria, the CEO must make a written order, as mandated by Section 269P(3).
The obligations and requirements imposed by the Act on the parties or entities it governs include the necessity for any applicant to ensure their application complies with the core criteria outlined in Section 269C. The CEO is required to publish a notice in the Gazette under Section 269K(1) inviting any interested parties to submit objections if they believe the TCO should not be made. Additionally, the Act mandates that TCOs are to come into force on the day the application is lodged, as per Section 269S(1). The CEO must also ensure that any TCO does not disadvantage any person or impose liabilities on any person in respect of actions taken before the TCO’s effective date.
The consequences of breaching the provisions of the Act can be significant. While the Act does not explicitly outline specific offences or penalties within this context, non-compliance with the terms of a TCO could lead to legal challenges and potential financial liabilities. For example, if an entity imports goods subject to a TCO without adhering to the terms of the concession, they could be liable for the applicable duty, which in this case is 5% as per item 50 of Schedule 4 to the Tariff. Furthermore, the Act ensures that the rights of any person, other than the Commonwealth, are not adversely affected by the TCO. Any breach of these conditions could potentially lead to civil or administrative actions, although the specific penalties are not detailed within the Act itself.