EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0904148
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.
Avk Australia applied for a TCO in respect of certain butterfly valves on 06 February 2009.
Instrument
TCO No 0904148 was made on 08 May 2009. It declares that those certain butterfly 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 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. 0904148 is taken to have come into force on 06 February 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 Tariff Concession Instrument No. 0904148, enacted in 2009, amends the Customs Act 1901 to address the gap in tariff concessions for specific goods not produced domestically. The Customs Act 1901 allows for Tariff Concession Orders (TCOs) to reduce customs duty on certain goods not manufactured in Australia, provided they meet core criteria such as the absence of substitutable goods produced locally. This legislative instrument was introduced to facilitate tariff reductions for Avk Australia's butterfly valves, which were found not to have substitutable domestic alternatives. The instrument was enacted by the Chief Executive Officer of Customs, adhering to the procedural requirements set forth in the Act, including public consultation, which in this case did not elicit any submissions. The policy objective is to support importers by reducing duty rates, thereby potentially increasing the competitiveness and availability of these goods in the Australian market.
Scope and Application
The Tariff Concession Instrument No. 0904148 applies to the specific goods, in this case certain butterfly valves, for which a Tariff Concession Order (TCO) is granted under the Customs Act 1901. The Act facilitates the application process whereby a person can apply for a TCO, subject to the goods not being specified in section 269SJ of the Act, which excludes certain goods from TCO eligibility. The application process is overseen by the Chief Executive Officer of Customs, who must determine if the application meets the core criteria, primarily that no substitutable goods were produced in Australia in the ordinary course of business at the time of the application. If the application meets these criteria, the CEO is required to make a written order, effectively applying a lower rate of customs duty to the goods in question. The geographic reach of this legislation is national, as it pertains to customs duty and applies across Australia. The TCO does not impose liabilities on any person and does not affect existing rights adversely, although it does confer benefits on importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO was taken to have come into force. The Act allows for the scope of application to be extended through subordinate instruments, which may further define terms such as "substitutable goods" and "ordinary course of business".
Key Provisions
The Tariff Concession Instrument No. 0904148 (TCO No. 0904148) under the Customs Act 1901 (the Act) introduces a tariff concession for certain butterfly valves, reducing the customs duty from 5% to free. The key operative sections in this context include section 269C, which outlines the core criteria for a tariff concession order (TCO), and section 269P(3), which mandates the CEO to make a written order if the application meets these criteria (ss. 269C, 269P(3)). According to section 269C, a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definition of "substitutable goods" is provided in section 269D, "ordinary course of business" in section 269E, and the term "goods produced in Australia" is defined in section 269D.
The obligations imposed by the Act on the parties include the requirement for an applicant to ensure that their application for a TCO meets the core criteria as outlined in section 269C. This involves demonstrating that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must then decide whether to grant the TCO based on this assessment (s. 269P(3)). The CEO is also obligated to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s. 269K(1)). In this case, the CEO received no submissions in response to the published notice.
Breach of the provisions outlined in the Customs Act 1901 can result in various consequences. While specific offences and penalties are not detailed in the explanatory statement, the Act generally provides for both civil and criminal penalties for non-compliance with its provisions. Civil penalties can include fines up to a maximum of $22,200 for individuals and $111,000 for bodies corporate, as stipulated under section 269 of the Act. Criminal penalties may also apply, with potential imprisonment terms varying based on the severity of the offence. The specific penalties would depend on the nature and extent of the breach, as detailed in the Act and applicable regulations.