EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0912182
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.
Rio Tinto Aluminium Ltd applied for a TCO in respect of certain cooling tower parts on 9 April 2009.
Instrument
TCO No 0912182 was made on 3 July 2009. It declares that those certain cooling tower parts 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. 0912182 is taken to have come into force on 9 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 Parliament of Australia, establishes a framework for the application of customs duties on imported goods. Among its provisions, Part XVA of the Act enables the Chief Executive Officer (CEO) of Customs to issue Tariff Concession Orders (TCOs), which apply reduced rates of customs duty on specified goods. This legislative instrument addresses the issue of ensuring fair trade practices by allowing duty reductions on goods that are not produced domestically, thereby encouraging competitive pricing and access to essential goods. The objective is to support the economic efficiency and consumer benefit by avoiding undue protection of local industries that do not produce the specific goods in question. The Tariff Concession Instrument No. 0912182, issued on 3 July 2009, is an example of such an order, where the CEO determined that certain cooling tower parts were subject to a tariff concession following an application by Rio Tinto Aluminium Ltd, resulting in a duty rate of free instead of the general rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 0912182 under the Customs Act 1901 applies to entities and individuals who seek to import certain goods, in this case, cooling tower parts, and provides them with tariff concessions. The scope of this legislation is directed towards facilitating the importation of specific goods by reducing or eliminating customs duties, provided that these goods are not substitutable by domestically produced items. This Act applies nationally and is overseen by the Chief Executive Officer of Customs, who has the authority to make Tariff Concession Orders (TCOs) based on applications that meet specified criteria, such as the absence of substitutable goods produced in Australia. The geographic reach of this Act is nationwide, as it operates under the auspices of the Commonwealth of Australia. The Act does not specify exclusions or exemptions, except for goods listed in section 269SJ of the Customs Act 1901, which categorically cannot be subject to a TCO. The application of this Act may be further defined through subordinate instruments, allowing for adjustments and clarifications as necessary.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 0912182, revolve around the process and requirements for applying for and granting a Tariff Concession Order (TCO) under the Customs Act 1901 (section 269C, 269B, and 269D). The CEO of Customs must determine whether a TCO application meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business at the time of the application (section 269F and 269P(3)). If the criteria are satisfied, the CEO must make a written order declaring that the goods the subject of the TCO application are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)).
Obligations and requirements imposed by the Act on the parties or entities it governs include the necessity for the CEO to publish a notice in the Gazette inviting submissions from any interested parties when a TCO application is accepted as valid (subsection 269K(1)). In this case, Rio Tinto Aluminium Ltd applied for a TCO in respect of certain cooling tower parts on 9 April 2009, and as per the Act, the TCO was taken to have come into force on that date (subsection 269S(1)). The CEO must also ensure that the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth in respect of anything done or omitted to be done before the date of registration (subsection 269S(1)).
In terms of offences, penalties, or civil/criminal consequences for breach, the Act does not specify explicit penalties for failing to comply with the requirements for TCO applications. However, failure to adhere to the conditions set out in the Act could potentially lead to disputes or legal actions by affected parties. The benefits of the TCO, such as the reduced duty rate for the goods, are intended to provide a commercial advantage to importers, who may apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. The Act ensures that the rights of importers are beneficially affected, without imposing liabilities on any person other than the Commonwealth.