EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0908602
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.
Smith International Australia applied for a TCO in respect of certain hydraulic accelerator on 13 March 2009.
Instrument
TCO No 0908602 was made on 29 May 2009. It declares that those certain hydraulic accelerator 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. 0908602 is taken to have come into force on 13 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 Tariff Concession Instrument No. 0908602 under the Customs Act 1901 was introduced in 2009 to provide relief on customs duty for specific goods, in this case certain hydraulic accelerators, by the Chief Executive Officer of Customs. The objective of this legislative instrument is to ensure that lower rates of customs duty apply to goods that are not produced in Australia and for which there are no substitutable goods, as outlined in section 269F and section 269C of the Act respectively. The instrument was enacted to address the gap in duty concessions for imported goods that have no local equivalent, thereby promoting fair trade practices and potentially encouraging investment in industries that are not yet established in Australia. The instrument was made effective from the date of the application, 13 March 2009, and no submissions were received opposing the concession. The rights of importers are protected under the Act, with provisions allowing them to apply for a refund of duty on goods imported since the effective date of the Tariff Concession Order.
Scope and Application
The Tariff Concession Instrument No. 0908602, issued under Part XVA of the Customs Act 1901, pertains specifically to applications for Tariff Concession Orders (TCOs) that can be made by any person to the Chief Executive Officer of Customs. The Act applies to goods that are subject to TCO applications, provided these goods do not fall under the category specified in section 269SJ, which lists items that cannot be subject to a TCO. A TCO application is considered valid if, on the date of application, there are no substitutable goods produced in Australia in the ordinary course of business, as defined by the Act. The geographic reach of the Act is national, applying throughout Australia as a Commonwealth legislation. Additionally, the Act allows for the extension or restriction of its application through subordinate instruments, such as the Customs Tariff Act 1995. Notably, the rights of third parties are protected under the Act, ensuring that the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken before the TCO's effective date. The TCO in question, effective from 13 March 2009, concerns certain hydraulic accelerators and applies a zero duty rate instead of the general 5% rate, benefiting importers by allowing them to apply for duty refunds on imports since the TCO's effective date.
Key Provisions
The Customs Act 1901 (the Act) and its associated regulations enable the Chief Executive Officer of Customs (the CEO) to create Tariff Concession Orders (TCOs) which apply reduced customs duties on specified goods. These concessions are outlined in Part XVA of the Act, and the process begins with a person applying to the CEO for a TCO in respect of particular goods (section 269F). If the CEO is satisfied that the goods in question are not excluded under section 269SJ, they must then assess the application against the core criteria set out in section 269C. This requires that on the date the application is lodged, no substitutable goods were being produced in Australia in the ordinary course of business. Definitions of key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively.
The obligations imposed by the Act on the parties involved include the requirement for the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid. This notice invites any person who believes there are reasons why the TCO should not be granted to submit their concerns to the CEO (subsection 269K(1)). In the case of TCO No. 0908602, no submissions were received in response to this invitation. Furthermore, a TCO is deemed to come into effect on the day the application for the TCO was lodged, and this date also sets the timeframe from which the reduced duty rate applies (subsection 269S(1)).
In terms of penalties and consequences, the Act does not explicitly detail specific offences or penalties related to the breach of TCO provisions. However, it is implicit that any fraudulent application for a TCO, or misuse of the concessions granted by a TCO, could lead to criminal or civil consequences under the broader provisions of the Customs Act or other relevant legislation. The potential penalties for such breaches could include fines and imprisonment, although the exact penalties would be determined in the context of the specific offence under other sections of the Customs Act or related laws.