EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0907284
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.
Esso Australia Resources applied for a TCO in respect of certain two phase separator on 03 March 2009.
Instrument
TCO No 0907284 was made on 22 May 2009. It declares that those certain two phase separator 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. 0907284 is taken to have come into force on 03 March 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 Australian Parliament, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for lower customs duty rates on specific goods, provided certain criteria are met. The primary problem or gap addressed by this Act is the facilitation of reduced customs duty on goods for which no suitable Australian-made substitutes are available, thereby encouraging imports where necessary. The explanatory statement regarding Tariff Concession Instrument No. 0907284, made on 22 May 2009, illustrates this process by detailing how the CEO was satisfied that no substitutable goods for certain two phase separators were produced in Australia, leading to the concession of a 5% duty rate being reduced to free. The intent of this legislative framework is to ensure that the Australian market remains competitive and that essential goods are accessible at reduced costs where local production is not viable.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a mechanism for granting reduced customs duty rates on certain goods, as specified in the Act. This is achieved through orders made by the Chief Executive Officer of Customs, provided that the goods in question do not have substitutable counterparts produced in Australia and the application meets the core criteria outlined in the Act. The application process requires the CEO to assess whether the goods in question are not specified in the exclusions list and whether they are eligible for tariff concessions based on the absence of locally produced substitutable goods. Once the CEO determines that an application meets the core criteria, they are obligated to issue a TCO, which effectively reduces the applicable customs duty rate for the specified goods. The TCO process also includes provisions for public consultation, with notices published in the Gazette inviting submissions on the proposed order. In this instance, TCO No. 0907284 was issued for certain two-phase separators on 22 May 2009, following an application by Esso Australia Resources, with no objections received during the consultation period. The order came into effect on 3 March 2009, the date of the application, and provides a duty-free concession for the specified goods, which would otherwise attract a 5% duty rate.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0907284, under the Customs Act 1901, concern the application and processing of Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods (s269F). The CEO must assess whether the application meets the core criteria, which are outlined in sections 269B, 269C, 269D, and 269E. If the CEO determines that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged, a TCO will be made (s269C). A TCO, when made, will specify that the goods are subject to a prescribed rate of customs duty as outlined in Schedule 4 to the Customs Tariff Act 1995 (s269P(3)).
The obligations imposed by the Act on parties and entities are primarily on the CEO of Customs. The CEO must accept a valid application for a TCO and assess whether it meets the core criteria. This includes determining whether there are substitutable goods produced in Australia (s269B, s269C, s269D, s269E). The CEO is also required to publish a notice in the Gazette inviting any interested parties to lodge a submission if they believe the TCO should not be made (s269K(1)). In this instance, the CEO did not receive any submissions in response to the published notice.
Breach of the provisions outlined in the Customs Act 1901 can lead to various penalties and consequences. While the explanatory statement does not explicitly outline specific penalties for non-compliance with TCO provisions, it is implied that failure to comply with the Act’s requirements could result in legal action. The penalties for non-compliance with customs regulations generally can include fines and potential criminal charges, depending on the severity and intent of the breach. The maximum penalties for breaches of the Customs Act can include substantial fines and imprisonment, as outlined in the relevant sections of the Act and other associated legislation.
In the context of TCOs, the primary focus is on ensuring that the correct rates of duty are applied to goods, and that the application process is transparent and fair. Importers and exporters must ensure they comply with the terms of any TCO and adhere to the customs duty rates specified. Failure to do so could result in the imposition of higher duty rates and potential legal consequences. The rights of importers are also protected, as they can apply for a refund of duty on goods imported since the TCO came into force (Reg 126(1)(r)).