EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0907833
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.
Control Innovations applied for a TCO in respect of certain air separators on 06 March 2009.
Instrument
TCO No 0907833 was made on 22 May 2009. It declares that those certain air separators 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. 0907833 is taken to have come into force on 06 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 Parliament of Australia, establishes a framework for the application of customs duties on imported goods. Part XVA of the Act introduces the mechanism for Tariff Concession Orders (TCOs) which allow for reduced customs duty rates on specified goods, provided certain criteria are met. The primary objective of this legislative framework is to facilitate economic efficiency and competitiveness by lowering the cost of importing goods that are not produced domestically. Tariff Concession Instrument No. 0907833, made on 22 May 2009, exemplifies the application of this scheme. In this instance, Control Innovations successfully applied for a TCO on certain air separators, resulting in a duty rate reduction from 5% to free. This legislative measure ensures that the rights of importers are preserved and potentially enhanced, without imposing any new liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods that attract a lower rate of customs duty, as determined by the CEO upon receiving an application from a person. The application process requires the CEO to assess whether the goods are substitutable by products manufactured in Australia and produced in the ordinary course of business. If the CEO determines that no such substitutable goods are produced in Australia, the application meets the core criteria, leading to the issuance of a TCO. The instrument impacts the importation of specific goods, such as certain air separators, by granting them duty-free status under the prescribed tariff item. The process includes a mandatory publication in the Gazette inviting submissions from the public, although in this instance, no objections were received. The commencement of a TCO is effective from the date the application is lodged, and it does not retroactively disadvantage any party or impose new liabilities, thereby protecting the rights of importers who can apply for duty refunds on goods imported since the TCO's effective date.
Key Provisions
The key provisions of the Customs Act 1901 (the Act) as related to Tariff Concession Orders (TCOs) are primarily found in Part XVA. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. The CEO must then assess whether the application meets the core criteria specified in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, a written order declaring the goods subject to a lower rate of customs duty is issued under section 269P(3). This order applies a prescribed item of Schedule 4 to the Customs Tariff Act 1995, as illustrated by TCO No. 0907833, which was made on 22 May 2009 for certain air separators.
The obligations and requirements imposed by the Act on the parties or entities it governs primarily involve the application and assessment process for TCOs. The CEO must ensure that all applications are reviewed against the core criteria specified in section 269C. This involves verifying that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made, as stipulated in subsection 269K(1). If no submissions are received, the CEO must proceed with making the TCO. The Act also mandates that the TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration, ensuring that no one is disadvantaged or imposed liabilities due to actions or omissions before the TCO date.
In terms of offences, penalties, or consequences for breach, the Act does not explicitly state civil or criminal penalties for failing to comply with the TCO provisions. However, it is implicit that non-compliance with the conditions set out in the TCO, or any fraudulent application process, could lead to legal consequences under other provisions of the Customs Act or related legislation. For example, any failure to declare goods correctly or any attempt to evade duty could result in penalties under other sections of the Act, including fines and imprisonment. The specific penalties would depend on the nature and severity of the breach, as determined by the courts.