EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0840697
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 applied for a TCO in respect of certain circulating valve on 20 November 2008.
Instrument
TCO No 0840697 was made on 27 February 2009. It declares that those certain circulating 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. 0840697 is taken to have come into force on 20 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, enacted by the Parliament of Australia, facilitates the importation of goods by allowing for tariff concessions through Tariff Concession Orders (TCOs). This legislation was introduced to address the need for a mechanism to provide duty-free or lower-duty access to specific goods, which could potentially stimulate trade and economic activities by reducing costs for importers. The policy objective, as outlined in the Act, is to ensure that such concessions are granted only when no substitutable goods are produced in Australia. The instrument in question, Tariff Concession Instrument No. 0840697, was made by the Chief Executive Officer of Customs on 27 February 2009, in response to an application by Smith International for a TCO on certain circulating valves. The instrument became effective on 20 November 2008, the date the application was lodged, and no objections were received during the consultation period. The order effectively grants a free rate of duty on the specified goods, which otherwise would attract a general duty rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 0840697, which was made under Part XVA of the Customs Act 1901, applies to specific circulating valves that Smith International applied for a tariff concession on 20 November 2008. The application was approved and a Tariff Concession Order (TCO) was issued on 27 February 2009, establishing that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995. This legislative instrument aims to provide tariff concessions for certain imported goods that do not have substitutable goods produced in Australia, thereby potentially reducing the customs duty rate from the general rate of 5% to free. The scope of the legislation is limited to the specific goods mentioned and does not affect any rights of persons other than the Commonwealth as at the date of registration of the TCO.
The geographic and jurisdictional reach of this Act is national, as it is an instrument of the Commonwealth under the Customs Act 1901. However, the Act does not specify any exclusions or exemptions apart from the goods listed in section 269SJ of the Act, which cannot be subject to a TCO. The application of the Act can be extended or restricted through subordinate instruments, such as regulations, but this particular TCO does not impose any liabilities on any person. The TCO was published in the Gazette with an invitation for submissions, but none were received. The TCO came into force on the day the application was lodged, 20 November 2008, and benefits importers of the specified goods by allowing them to apply for a refund of duty on goods imported since that date.
Key Provisions
The main provisions of the legislation, as detailed in sections 269F, 269C, 269B, and 269P(3) of the Customs Act 1901, allow for the application for and grant of Tariff Concession Orders (TCOs). An application for a TCO can be submitted by a person to the Chief Executive Officer (CEO) of Customs, who must then determine if the application meets the core criteria, including ensuring that no substitutable goods were produced in Australia on the day the application was lodged. If these criteria are met, the CEO must issue a TCO, which specifies that the goods in question are subject to a prescribed tariff concession. In this case, TCO No. 0840697 applies to certain circulating valves, with the general rate of duty being 5%, reduced to free under the concession. The TCO is effective from the date the application was lodged.
The obligations imposed by the Act on parties such as Smith International and the CEO include the submission of a valid TCO application, which must not pertain to goods specified in section 269SJ of the Act. The CEO is required to publish a notice in the Gazette inviting submissions from interested parties if they believe the TCO should not proceed. Once a TCO is issued, the CEO must ensure it is registered and communicated appropriately. Importers who qualify under the TCO can apply for a refund of duty on goods imported since the effective date of the TCO. The Act also mandates that the rights of individuals other than the Commonwealth are protected, ensuring no adverse effects from the TCO.
Breaches of the provisions outlined in the Customs Act 1901 may result in civil or criminal consequences, depending on the nature and severity of the infringement. Although specific penalties are not detailed in the explanatory statement, general penalties for breaches of customs regulations can include fines and, in severe cases, imprisonment. The precise penalties would be determined based on the specific breach and the discretion of the court or relevant authority. Compliance with the Act is crucial to avoid these potential repercussions.