EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0832865
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 water treatment plant on 26 September 2008.
Instrument
TCO No 0832865 was made on 19 December 2008. It declares that those certain water treatment 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. 0832865 is taken to have come into force on 26 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 regulation of customs duties and other import charges. Specifically, Part XVA of the Act establishes the procedure for the issuance of Tariff Concession Orders (TCOs), which are intended to grant concessions on customs duties for certain goods under specific conditions. Originating from a need to facilitate trade and economic efficiency by reducing import costs for particular goods, this legislation allows for the application of lower customs duties for goods not produced domestically, thereby encouraging importation and potentially fostering innovation and competition within the Australian market. The explanatory statement for Tariff Concession Instrument No. 0832865, made under the authority of the Customs Act 1901, clarifies the process and criteria for granting such concessions, ensuring transparency and adherence to the legislative intent of promoting beneficial trade practices.
Scope and Application
The Customs Act 1901, as amended, provides for the creation of Tariff Concession Orders (TCOs) to lower the rate of customs duty on specific goods. Under section 269F, any person may apply to the Chief Executive Officer of Customs for a TCO in relation to goods, provided that the goods are not specified in section 269SJ, which lists those that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business, a TCO will be issued. The scope of the Act applies to any individual or entity seeking to import goods into Australia, with the application of a TCO impacting the duty rates on specified goods. The application of TCOs is national in reach and applies across all states and territories within Australia. Any exclusions or exemptions are specified in the Act itself or in the accompanying Customs Tariff Act 1995. The application of TCOs can also be extended or restricted through subordinate instruments, as authorised by the Customs Act 1901.
Key Provisions
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be made, as detailed in Part XVA. These orders allow for a reduced rate of customs duty on certain goods. An application for a TCO can be made to the Chief Executive Officer of Customs (CEO) by any person, as per section 269F. If the application is not for goods specified in section 269SJ, which are ineligible for TCOs, the CEO must then determine whether the application meets the core criteria outlined in section 269C. This requires the CEO to ascertain that no substitutable goods were produced in Australia on the date the application was lodged. The terms 'substitutable goods', 'goods produced in Australia' and 'ordinary course of business' are defined in sections 269D, 269E, and 269P(3) respectively.
The CEO’s obligations under the Act include making a written TCO if the application meets the core criteria. This written order specifies that the goods in question will be subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which determines the applicable rate of duty. In the case of Tariff Concession Order No. 0832865, the CEO determined that no substitutable goods were produced in Australia for the water treatment plant in question, thus meeting the core criteria. As a result, the TCO declares that these goods are subject to a zero rate of duty, as opposed to the general rate of 5%.
Breach of the conditions outlined in the TCO, or failure to comply with the requirements of the Customs Act 1901, can result in penalties. The Act does not explicitly state the penalties for non-compliance, but it is understood that breaches of customs laws can result in fines or imprisonment under other sections of the Customs Act or associated regulations. The specific penalties depend on the nature and severity of the breach, and can include substantial financial penalties and/or imprisonment. The TCO itself does not impose any liabilities on any person, and it does not affect the rights of any person as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken prior to registration.