EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0840418
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.
Rio Tinto Aluminium applied for a TCO in respect of certain air or gas flow controlling dampers on 19 November 2008.
Instrument
TCO No 0840418 was made on 27 February 2009. It declares that those certain air or gas flow controlling dampers 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. 0840418 is taken to have come into force on 19 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 Customs Act 1901 provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs). Enacted by the Parliament of Australia, this Act aims to facilitate trade by allowing the Chief Executive Officer of Customs to reduce or waive customs duty on certain imported goods under specific conditions. The 2009 Tariff Concession Instrument No. 0840418 was introduced to address the need for tariff concessions on certain air or gas flow controlling dampers imported by Rio Tinto Aluminium. The policy objective was to ensure that these goods, which were not produced in Australia and had no substitutable Australian-made alternatives, would be subject to a lower rate of customs duty, thereby supporting the efficient operation of the applicant's business without disadvantaging other stakeholders.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) which apply a lower rate of customs duty to goods specified in the order. This scheme allows entities such as Rio Tinto Aluminium to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods. The CEO is mandated to consider the application against core criteria, notably whether substitutable goods are produced in Australia in the ordinary course of business. If the application meets the criteria, the CEO is required to issue a written TCO, as demonstrated by TCO No. 0840418 for certain air or gas flow controlling dampers, which were granted a free duty rate instead of the general 5% duty. The application process mandates public notice in the Gazette, inviting submissions from interested parties, although in this instance, no submissions were received. The TCO is effective from the date the application is lodged, ensuring no retroactive disadvantage or liabilities for entities other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 0840418 under the Customs Act 1901 provides for tariff concessions on certain air or gas flow controlling dampers, as outlined in sections 269C and 269P of the Act (269C, 269P). This instrument was made in response to an application from Rio Tinto Aluminium, which sought a tariff concession order (TCO) on these specific dampers. The Chief Executive Officer of Customs (CEO) made this order on 27 February 2009, declaring that the dampers are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a resulting duty rate of free, down from the general rate of 5% (subsection 269P(3)). This concession applies from 19 November 2008, the date the application was lodged (subsection 269S(1)).
Entities subject to this TCO, primarily importers and exporters of the specified dampers, must comply with the new duty rate as stipulated. The CEO's decision was based on the absence of substitutable goods produced in Australia, fulfilling the core criteria as per section 269C (269C). Importers of these dampers may benefit from this concession by applying for a refund of any duties paid since the effective date of the TCO, under paragraph 126(1)(r) of the Regulations. This obligation ensures that the tariff concession is correctly applied and any overpaid duties are refunded to the appropriate parties.
Failure to comply with the provisions of the TCO may result in civil or criminal consequences, although the specific penalties are not detailed in the explanatory statement. Typically, under Australian law, breaches of customs regulations can lead to penalties that may include fines and, in severe cases, imprisonment. The exact penalties would be determined based on the nature and severity of the breach, as per the relevant sections of the Customs Act 1901 and associated regulations.