EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0843452
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 backpressure regulating valves on 10 December 2008.
Instrument
TCO No 0843452 was made on 06 March 2009. It declares that those certain backpressure regulating valves 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 10%. 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. 0843452 is taken to have come into force on 10 December 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, provides a framework for the regulation of customs duties and related matters. One significant aspect of this Act is Part XVA, which establishes the procedure for making Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce the customs duty on certain imported goods. The Tariff Concession Instrument No. 0843452, made under this framework, addresses the specific issue of applying tariff concessions to certain backpressure regulating valves. This instrument was introduced to provide relief from customs duties for these valves, which are essential for energy infrastructure, by reducing the duty rate from 10% to free, thereby addressing the problem of high customs costs for these critical components. The policy objective is to support the energy sector by lowering the cost of importing necessary equipment, which can ultimately benefit consumers and the industry by promoting efficient energy use.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply lower rates of customs duty to specific goods. This mechanism is available to any person who applies for a TCO in respect of goods, provided that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Act applies to entities and individuals involved in the import of goods that are eligible for tariff concessions, and it covers all industries that may benefit from reduced customs duty rates on certain goods. The geographic reach of the Act is national, impacting all imports into Australia. However, the Act does not extend to goods listed in section 269SJ, which are excluded from tariff concessions. The application process for a TCO involves meeting core criteria, including the absence of substitutable goods produced in Australia, as defined by sections 269D and 269E of the Act. Once a TCO is made, it has retrospective effect from the date of application lodging, provided it meets the stipulated conditions and criteria.
Key Provisions
The Tariff Concession Instrument No. 0843452 under the Customs Act 1901 (sections 269F and 269P(3)) establishes a concession on customs duties for specific backpressure regulating valves, applying the general rate of duty of 10% to a lower rate of zero percent. Origin Energy Power applied for this concession on 10 December 2008, and it was granted on 6 March 2009. This concession applies to goods specified in item 50 of Schedule 4 of the Customs Tariff Act 1995, contingent upon the Chief Executive Officer of Customs being satisfied that no substitutable goods were produced in Australia at the time the application was lodged.
The Customs Act 1901 imposes several obligations on parties applying for a Tariff Concession Order (TCO). Firstly, applicants must ensure that their application is not in respect of goods specified in section 269SJ, which are ineligible for a TCO. Additionally, the applicant must demonstrate that the goods meet the core criteria outlined in section 269C, meaning that no substitutable goods were produced in Australia in the ordinary course of business. The CEO must then publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, as required by section 269K(1). The CEO did not receive any submissions in response to the published notice for this particular TCO.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations could result in various consequences. While the Act does not explicitly state penalties for non-compliance, breaches of customs laws generally lead to civil and criminal penalties. Civil penalties can include fines, and in severe cases, criminal penalties may be imposed, including imprisonment. The specific penalties depend on the nature and severity of the breach, as outlined in other sections of the Customs Act 1901 and the Customs Regulations 1994. The Tariff Concession Order itself does not impose any liabilities on any person and does not affect the rights of persons other than the Commonwealth regarding actions taken before the TCO’s registration.