EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0838649
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.
Smith International Australia Pty Ltd applied for a TCO in respect of certain multi cycle by pass valve on 06 November 2008.
Instrument
TCO No 0838649 was made on 30 January 2009. It declares that those certain multi cycle by pass valve 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. 0838649 is taken to have come into force on 06 November 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. 0838649, enacted under the Customs Act 1901, addresses the issue of applying tariff concessions to specific imported goods, in this case, certain multi cycle by pass valves. The Instrument was introduced to provide a lower rate of customs duty on these goods, which is crucial for businesses importing such items, potentially reducing their costs and increasing competitiveness. The instrument was made by the Chief Executive Officer of Customs, who determined that no substitutable goods were produced in Australia, satisfying the core criteria for the tariff concession. This initiative aims to facilitate smoother importation processes and aligns with the policy objective of enhancing trade efficiency as outlined in the Customs Act 1901. The instrument's commencement date was 6 November 2008, and it does not affect any pre-existing rights or impose new liabilities on importers, thereby maintaining a fair trade environment.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities that seek to have a lower rate of customs duty applied to imported goods through the submission of a TCO application to the CEO. The CEO assesses applications against core criteria set out in the Act, primarily focusing on whether substitutable goods are produced in Australia. If the CEO determines that the application meets the criteria, a TCO is issued, which then applies a specified lower rate of duty on the goods in question. This process is governed by the Commonwealth and has a national reach, applying uniformly across Australia. The Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ, and any TCO does not affect the rights of persons in relation to actions taken before the registration of the order. The application of this legislation may be further defined or extended through subordinate instruments, such as regulations or further orders made by the CEO.
Key Provisions
The Tariff Concession Instrument No. 0838649, under the Customs Act 1901, applies to the specific multi cycle by pass valve identified in the instrument. Section 269C (1) of the Customs Act 1901 requires that a Tariff Concession Order (TCO) application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia at the time of the application. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they are mandated to issue a TCO, as outlined in section 269P(3) of the Act. This specific TCO (No. 0838649) was made on 30 January 2009 and it declares that certain multi cycle by pass valves are subject to a free rate of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995, as opposed to the general rate of 5%.
The Customs Act 1901 imposes certain obligations on both the CEO and applicants for a TCO. For the CEO, these include accepting valid TCO applications, evaluating them against the core criteria, and making a decision on whether to issue a TCO. The CEO is also required to publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be made, as stipulated in section 269K(1) of the Act. On the other hand, applicants must ensure their applications are complete and meet the core criteria, particularly focusing on the absence of substitutable goods produced in Australia. Failure to adhere to these requirements can result in the application being rejected.
The Act delineates various consequences for non-compliance with its provisions. Section 269S(1) of the Customs Act 1901 specifies that any failure to comply with the Act's requirements related to TCOs could potentially lead to legal action, although the specific penalties are not detailed in the explanatory statement. Furthermore, the TCO itself ensures that the rights of persons other than the Commonwealth are not adversely affected by its implementation. Any importer who imported the specified goods before the TCO came into effect may be entitled to a refund of duty under paragraph 126(1)(r) of the Regulations. This provision ensures that the TCO does not impose any liabilities on any person and benefits importers by potentially reducing their duty costs.