EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0844702
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.
Carrier Pty Ltd applied for a TCO in respect of certain air conditioner parts on 22 December 2008.
Instrument
TCO No 0844702 was made on 13 March 2009. It declares that those certain air conditioner parts 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. 0844702 is taken to have come into force on 22 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 Tariff Concession Instrument No. 0844702 was enacted in 2009 under the Customs Act 1901 to provide tariff concessions for certain air conditioner parts, thereby addressing the issue of potentially prohibitive customs duties on these goods. This instrument was issued by the Chief Executive Officer of Customs, as authorised under Part XVA of the Customs Act, which allows for the creation of Tariff Concession Orders (TCOs) to apply lower rates of customs duty on specified goods. The policy objective of this legislation is to encourage the importation of goods that are not produced domestically, thereby supporting trade and potentially lowering consumer costs.
The instrument was implemented following an application by Carrier Pty Ltd on 22 December 2008, and it was registered on 13 March 2009. The Customs Act mandates that applications for TCOs must meet core criteria, such as the absence of substitutable goods produced in Australia. In this case, the CEO determined that no such substitutable goods were produced domestically, leading to the issuance of the TCO. This decision was made without any submissions opposing the application, as none were received in response to the notice published in the Gazette. The TCO came into effect on the date the application was lodged, and it provides a zero percent duty rate on the specified air conditioner parts, which contrasts with the general rate of 10 percent. The TCO also ensures that it does not disadvantage any persons by affecting their rights as at the date of registration.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the application of tariff concession orders (TCOs) by the Chief Executive Officer of Customs (CEO). An applicant may request a TCO for goods that are not specified in section 269SJ of the Act, provided the application meets the core criteria under section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the CEO is satisfied with the application, they must issue a TCO, which declares the prescribed rate of customs duty for the specified goods. In the case of Carrier Pty Ltd, a TCO was issued for certain air conditioner parts, resulting in a duty rate of free instead of the general rate of 10%. The TCO process includes publishing a notice in the Gazette inviting submissions from any person who may object to the TCO, though in this case, no submissions were received. The TCO's effective date aligns with the application date, and it does not retroactively disadvantage any person or impose liabilities for actions taken before the TCO's registration.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in relation to Tariff Concession Orders (TCOs), are sections 269C, 269F, and 269P. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO for goods. If the CEO is satisfied that the application meets the core criteria, as outlined in section 269C, and the goods are not specified in section 269SJ, the CEO must make a written order, a TCO, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. For example, in TCO No. 0844702, certain air conditioner parts are declared as goods to which item 50 of Schedule 4 applies, resulting in a duty rate of free instead of the general rate of 10%.
The Act imposes several obligations and requirements on the parties involved. The CEO must ensure that the application for a TCO is not in respect of goods specified in section 269SJ and must verify that no substitutable goods were produced in Australia in the ordinary course of business, as per section 269C. Additionally, as per section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. If no submissions are received, the CEO can proceed with making the TCO.
In terms of consequences for breaches, the Customs Act 1901 does not explicitly outline specific offences, penalties, or civil/criminal consequences for failing to comply with the requirements for TCOs. However, the Act does provide that a TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration, and does not impose any liabilities on any person in respect of anything done or omitted to be done before the date of registration. This means that the TCO does not disadvantage any person and does not create new liabilities for them.
Overall, the Tariff Concession Instrument No. 0844702 under the Customs Act 1901 allows for the reduction of customs duty on certain air conditioner parts, provided that the application meets the core criteria and no substitutable goods were produced in Australia. The CEO of Customs plays a key role in determining whether to grant a TCO and must follow the procedural requirements set out in the Act. The rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is taken to have come into force. The Act ensures that the TCO does not disadvantage any person or impose new liabilities on them.