EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0835842
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.
Toshiba Pty Ltd applied for a TCO in respect of certain phase shifting transformers on 16 October 2008.
Instrument
TCO No 0835842 was made on 14 January 2009. It declares that those certain phase shifting transformers 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. 0835842 is taken to have come into force on 16 October 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, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These TCOs allow for reduced customs duty rates on specific goods, provided certain criteria are met. Enacted to address the need for flexible tariff arrangements that can respond to the unique economic circumstances of businesses, the Act facilitates tariff concessions that can promote the competitiveness of Australian industry and the efficiency of trade. The primary objective, as stated, is to ensure that a TCO application is only granted if no substitutable goods are produced in Australia at the time the application is lodged, thereby preventing domestic production from being adversely affected. The introduction of TCO No. 0835842 in 2009, which granted a tariff concession for certain phase shifting transformers, exemplifies the Act's aim to support specific sectors by lowering the duty on imported goods, thereby benefiting importers and maintaining the integrity of the Australian market.
Scope and Application
The Customs Act 1901, through Part XVA, enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply a lower rate of customs duty to specific goods. An application for a TCO must meet certain core criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business. This requirement ensures that the concession is granted where Australian production of the goods in question is non-existent or insufficient to meet domestic needs. The TCO applies to the specific goods for which it is granted and affects the duties applied to those goods from the date the application is lodged. This legislation applies nationally across Australia, and its scope is limited to goods that are not specified in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The TCO does not extend to impose liabilities on persons for actions taken prior to the order's effective date, thereby protecting the rights of those who have already engaged in transactions involving the goods before the concession was applied.
Key Provisions
The Tariff Concession Instrument No. 0835842 primarily establishes a lower rate of customs duty on certain phase shifting transformers, as outlined in section 269C (1) of the Customs Act 1901. This concession applies when no substitutable goods are produced in Australia on the date the application was lodged, as per section 269P (3) of the Act. The CEO, satisfied that the application meets these core criteria, issues a Tariff Concession Order (TCO) that declares these transformers as goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies. This effectively means the duty on these goods is set at free, whereas the general rate is 5%.
Under this legislation, parties or entities must comply with several obligations. Firstly, if a person wishes to apply for a TCO, they must do so under section 269F of the Act and ensure their application does not concern goods specified in section 269SJ of the Act. The CEO has the authority to determine if the application meets the core criteria, particularly if no substitutable goods are produced in Australia. Additionally, the CEO must publish a notice in the Gazette inviting any submissions from interested parties, as per section 269K (1) of the Act. In the case of TCO No. 0835842, no submissions were received, which facilitated the order's issuance.
Failure to comply with the provisions of the Customs Act 1901, particularly regarding the submission of false information or misrepresentation of facts in a TCO application, could lead to severe consequences. Although specific offences, penalties, or civil/criminal consequences are not detailed in the explanatory statement, the general legal framework under the Customs Act implies that breaches might result in penalties. The Act encompasses various sections that provide for offences and penalties, including fines and imprisonment for breaches related to customs and excise duties. The precise penalties would depend on the nature and severity of the breach, but they could potentially include substantial fines and imprisonment terms as stipulated by the broader legal provisions within the Customs Act.
In conclusion, TCO No. 0835842 offers significant tariff concessions for certain phase shifting transformers, reducing the duty rate from 5% to free. It imposes specific obligations on applicants to ensure their applications meet the core criteria and mandates the CEO to publish notices and accept submissions. While the explanatory statement does not specify exact penalties for non-compliance, it is clear that adherence to the Act's provisions is crucial, with potential repercussions including fines and imprisonment for serious breaches.