EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0831074
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.
Ozito Industries applied for a TCO in respect of certain constant pressure water pump on 12 September 2008.
Instrument
TCO No 0831074 was made on 05 December 2008. It declares that those certain constant pressure water pump 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. 0831074 is taken to have come into force on 12 September 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 Australian Parliament, provides a framework for the administration of customs and excise in Australia. The Act was amended in 2001 to include Part XVA, which enables the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to lower the rate of customs duty on certain goods. The policy objective behind this amendment was to support Australian manufacturing and trade by providing tariff relief for imported goods where no substitutable domestic product exists. This legislative change aimed to fill the gap by offering a mechanism to address competitive disadvantages faced by Australian producers due to the importation of similar goods. The Tariff Concession Instrument No. 0831074, issued in 2008, is an example of this mechanism in action, where a TCO was granted for certain constant pressure water pumps, effectively reducing the duty on these goods from 5% to free, provided no suitable Australian-made alternatives were being produced.
Scope and Application
The Tariff Concession Instrument No. 0831074 pertains to the Customs Act 1901 and operates within the framework of Part XVA, which facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This instrument applies specifically to certain constant pressure water pumps, as determined by an application submitted by Ozito Industries on 12 September 2008. The legislation aims to provide a concessional rate of customs duty for these goods, effectively reducing the duty from the general rate of 5% to free, provided that no substitutable goods are produced in Australia as per the criteria outlined in section 269C of the Act. The instrument is designed to benefit importers by allowing them to claim refunds for duties paid on these goods since the date the TCO is deemed to have come into force, which is the same as the date the application was lodged. Importantly, the TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any new liabilities on individuals or entities.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0831074 (the Instrument) under the Customs Act 1901 are sections 269C, 269P(3), and 269SJ. Section 269C specifies that a Tariff Concession Order (TCO) application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) requires the Chief Executive Officer of Customs (CEO) to make a written order (TCO) if satisfied that the application meets the core criteria. Section 269SJ lists goods that cannot be subject to a TCO. In this case, the Instrument declares that certain constant pressure water pumps are goods to which item 50 of Schedule 4 to the Tariff applies, resulting in a duty rate of free instead of the general rate of 5%.
The Instrument imposes obligations on the CEO of Customs to assess the validity of a TCO application and to make a written order if the application meets the core criteria, as specified in section 269C of the Act. The CEO must also publish a notice in the Gazette inviting any person to lodge a submission if they believe there are reasons why the TCO should not be made. The CEO must consider any submissions received and decide whether to make the TCO.
Failure to comply with the requirements of the Customs Act 1901 or the Instrument can result in civil or criminal consequences. Specifically, under section 278 of the Customs Act, a person who contravenes any provision of the Act or the regulations may be liable for a civil penalty. The maximum penalty for a corporation is $210,000, and for an individual, it is $42,000. Additionally, under section 281 of the Customs Act, a person who knowingly or recklessly contravenes a provision of the Act may be guilty of an offence and liable to a criminal penalty. The maximum penalty for a corporation is $420,000, and for an individual, it is $84,000. Furthermore, under section 279 of the Customs Act, a person who provides false or misleading information in an application for a TCO may be liable for a civil penalty, with the maximum penalty for a corporation being $210,000 and for an individual, $42,000.