EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0911306
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.
Allied Pumps Pty Ltd applied for a TCO in respect of certain rotary lobe pumps on 03 April 2009.
Instrument
TCO No 0911306 was made on 29 June 2009. It declares that those certain rotary lobe pumps 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. 0911306 is taken to have come into force on 03 April 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 Commonwealth Parliament, establishes a framework for the administration of customs duties and the regulation of imports and exports. One significant aspect of this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allows for reduced customs duties on specific goods, thereby addressing the need to support Australian industries by reducing costs and increasing competitiveness in certain markets. The Act empowers the Chief Executive Officer of Customs to make these orders upon satisfying specific criteria, such as the absence of substitutable goods produced in Australia. This mechanism was introduced to foster economic growth by allowing certain imported goods to enter the market at lower duty rates, thus encouraging their use and consumption. The explanatory statement for Tariff Concession Instrument No. 0911306 illustrates the application of this framework in practice, as seen in the case of Allied Pumps Pty Ltd, which successfully applied for a TCO for rotary lobe pumps, resulting in a duty-free rate for these goods.
Scope and Application
The Customs Act 1901 applies to the importation and exportation of goods in Australia and provides for the administration and collection of customs duty and other charges. Specifically, under Part XVA of the Act, the Chief Executive Officer of Customs (the CEO) has the authority to make Tariff Concession Orders (TCOs) that lower the rate of customs duty for certain goods. The scope of the Act includes any person or entity that imports or exports goods, as well as the goods themselves. The Act applies across the Commonwealth of Australia and its territories. The Act's provisions can be extended or modified through subordinate instruments, such as regulations and orders, which may further define the application and administration of the Act. The Act does not apply to goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. The CEO is required to consult with relevant parties, including publishing a notice in the Gazette, before making a TCO, although no submissions were received in response to the notice for TCO No. 0911306.
Key Provisions
The Tariff Concession Instrument No. 0911306, under the Customs Act 1901, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. The primary sections involved in this process include sections 269C, 269B, 269D, 269E, 269F, 269P, 269K, 269S, and 269SJ of the Act. When an application is submitted under section 269F, the CEO must first ensure it does not pertain to goods outlined in section 269SJ, which are ineligible for TCOs. If the application is valid, the CEO must assess whether it meets the core criteria specified in section 269C, which involves determining whether there are any substitutable goods produced in Australia on the day the application was lodged. If the CEO confirms that no such substitutable goods exist, they are required to issue a written TCO under section 269P(3).
Under this Act, the CEO has several obligations when processing TCO applications. Firstly, the CEO must ensure that the application is not for goods listed in section 269SJ. If the application is deemed valid, the CEO must then verify the core criteria as specified in section 269C. This involves confirming that no substitutable goods were produced in Australia on the day the application was lodged. If these criteria are met, the CEO must make a written TCO, specifying the prescribed item in Schedule 4 of the Customs Tariff Act 1995 that applies to the goods in question. Additionally, as per section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be granted. If no submissions are received, the TCO can proceed.
The Act imposes several requirements and potential consequences for breaches. Firstly, the CEO is mandated to follow the stipulated process for reviewing and approving TCO applications. Failure to adhere to the legislative requirements can result in legal challenges or penalties. For example, if the CEO issues a TCO without fulfilling the criteria, the order could be contested in court, and the party aggrieved by the TCO could seek judicial review. Additionally, any party found to have deliberately circumvented the provisions of the Act to gain an unfair advantage could face civil or criminal penalties. While the Act does not explicitly state maximum penalties, it is understood that breaches of customs regulations can lead to significant fines and potential imprisonment, depending on the severity of the offence.
In summary, Tariff Concession Instrument No. 0911306 facilitates the reduction or elimination of customs duties on certain goods, provided specific criteria are met. The CEO of Customs has the responsibility of assessing applications and ensuring compliance with the Act’s provisions. Failure to adhere to these requirements could result in legal challenges and penalties, highlighting the importance of careful and thorough compliance by all involved parties.