EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0905076
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 transformer bushings on 13 February 2009.
Instrument
TCO No 0905076 was made on 15 May 2009. It declares that those certain transformer bushings 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. 0905076 is taken to have come into force on 13 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework for the administration of customs duties and other import charges. One of the mechanisms provided by the Act is the issuance of Tariff Concession Orders (TCOs) which allow for reduced customs duty rates on certain goods. The problem or gap addressed by this legislation is the potential disadvantage faced by Australian businesses that rely on imported goods which could otherwise be produced domestically. The Tariff Concession Instrument No. 0905076 was introduced to provide tariff concessions for specific goods, such as transformer bushings, that have no substitutable Australian-produced alternatives. The policy objective outlined in the Act is to facilitate the efficient operation of businesses by ensuring that they can access necessary goods at a lower cost when domestic production is not feasible. This concession is designed to support industry competitiveness and economic growth without imposing new liabilities or disadvantaging other stakeholders.
Scope and Application
The Tariff Concession Instrument No. 0905076 applies to entities seeking a tariff concession order (TCO) under the Customs Act 1901. Specifically, it pertains to Origin Energy Power's application for certain transformer bushings, which were granted a tariff concession reducing the duty from 5% to free. This legislation affects the goods in question and the entities involved in their import or production within Australia. The geographic reach of this Act is national, as it pertains to the application and regulation of customs duties across Australia. The Act does not specify exclusions or exemptions beyond those goods listed in section 269SJ of the Customs Act 1901 that cannot be subject to a TCO. The application process and criteria for granting TCOs are set out in the Act, with the CEO of Customs required to make a written order if certain core criteria are met, as outlined in sections 269C, 269D, and 269E. The TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the date of its registration.
Key Provisions
The main operative sections of this legislation are sections 269C, 269P, and 269S. Section 269C (1) of the Customs Act 1901 sets out the core criteria that must be met for a Tariff Concession Order (TCO) application to be valid. Section 269P (3) requires the Chief Executive Officer of Customs (CEO) to make a written order if the CEO is satisfied that the application meets the core criteria. Section 269S (1) establishes that the TCO is effective from the day the application was lodged. Specifically, TCO No. 0905076 was made on 15 May 2009, declaring that certain transformer bushings are subject to a lower rate of customs duty, effective from 13 February 2009.
The obligations imposed by this Act primarily fall on the CEO and the applicants. The CEO must ensure that a TCO application meets the core criteria before making a written order. Once an application is deemed valid, the CEO must publish a notice in the Gazette, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission. In this case, the CEO did not receive any submissions in response to the published notice. Applicants for a TCO must provide sufficient information to demonstrate that no substitutable goods are produced in Australia and that the goods in question are not specified in section 269SJ of the Act. Failure to meet these obligations can result in the CEO denying the application.
There are no explicit offences or penalties detailed in the Explanatory Statement for breaches of the Tariff Concession Instrument No. 0905076. However, non-compliance with the core criteria for a TCO application could result in the CEO denying the application. For breaches of other sections of the Customs Act 1901, penalties may apply. For example, under section 214 of the Act, a person who contravenes certain provisions may be subject to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for a single offence. In civil cases, penalties may include the recovery of unpaid duty and interest. The specific penalties depend on the nature and severity of the breach.