EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0901173
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.
Hitachi Construction applied for a TCO in respect of certain hydraulic filters on 15 January 2009.
Instrument
TCO No 0901173 was made on 14 April 2009. It declares that those certain hydraulic filters 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. 0901173 is taken to have come into force on 15 January 2009.
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, includes provisions for the establishment of Tariff Concession Orders (TCOs) under its Part XVA. These TCOs are designed to apply a reduced rate of customs duty to specified goods, provided that certain criteria are met, such as the absence of substitutable goods being produced in Australia. This mechanism was introduced to facilitate the importation of goods that are not locally produced, thereby supporting industries that rely on imported components or materials. The policy objective is to ensure that Australian businesses can operate competitively in the global market by reducing the cost of importing necessary goods. In the case of Tariff Concession Instrument No. 0901173, the instrument was introduced to provide a tariff concession for certain hydraulic filters, effectively reducing the duty on these items from 5% to free, based on the finding that no substitutable goods were produced in Australia at the time of the application.
Scope and Application
The Tariff Concession Instrument No. 0901173, made under the Customs Act 1901, applies to specific hydraulic filters for which Hitachi Construction made an application. The Act allows the Chief Executive Officer of Customs to grant tariff concessions, which result in a reduced rate of customs duty on the specified goods. This applies to entities and individuals importing the designated goods into Australia, provided that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this Act is national, impacting importers across all states and territories. There are exclusions as per section 269SJ of the Act, which specifies goods that cannot be subject to a tariff concession order. The Act allows for the extension of its application through subordinate instruments, although none are currently in effect. The instrument came into force on 15 January 2009, the date on which the application was lodged, and it does not affect the rights of persons or impose liabilities for actions taken prior to its registration.
Key Provisions
The Tariff Concession Instrument No. 0901173, under the Customs Act 1901, provides the main operative sections that allow for the establishment of Tariff Concession Orders (TCO) for specific goods. Section 269F allows an applicant to request a TCO from the Chief Executive Officer of Customs (CEO), provided the goods in question are not those listed in section 269SJ, which are ineligible for tariff concessions. If the CEO determines that the application meets the core criteria, they must issue a TCO, as outlined in section 269C, which stipulates that no substitutable goods were produced in Australia at the time of application. The TCO then applies a prescribed tariff rate from Schedule 4 of the Customs Tariff Act 1995 to the goods in question.
The obligations imposed by this legislation are primarily on the CEO, who must assess the validity of TCO applications according to the criteria set forth in the Customs Act 1901. This includes determining whether any substitutable goods were produced in Australia at the time of the application, as defined by sections 269D and 269E. Furthermore, the CEO is mandated to publish a notice in the Gazette inviting submissions from any interested parties, as per section 269K(1), and consider these submissions before making a decision on the TCO application. The CEO is also responsible for ensuring that the TCO does not negatively affect the rights of any person as at the date of registration, as per section 269S(1).
In terms of consequences for non-compliance or breaches, the Customs Act 1901 does not explicitly outline specific offences or penalties related to the TCO process itself. However, general provisions within the Act and associated regulations may apply to breaches of customs laws or incorrect claims for tariff concessions. Penalties for breaches could range from fines to imprisonment, depending on the severity and intent of the breach. For example, under section 243 of the Customs Act 1901, persons found guilty of defrauding the revenue or attempting to evade duty may face fines or imprisonment. Additionally, the Commissioner of Customs may seek civil penalties for incorrect tariff classifications or fraudulent claims, which could include significant financial penalties.