EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0916642
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.
Boc Ltd applied for a TCO in respect of certain hydrogen generator parts on 15 May 2009.
Instrument
TCO No 0916642 was made on 24 July 2009. It declares that those certain hydrogen generator 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. 0916642 is taken to have come into force on 15 May 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. 0916642, enacted in 2009, operates under the Customs Act 1901 to provide tariff concessions for certain goods, addressing the need for reduced customs duties on specified items to encourage trade and economic benefits. This instrument was introduced to facilitate lower customs duty rates for goods that are not produced in Australia and do not have substitutable domestic goods, as outlined under section 269F of the Customs Act 1901. The instrument was made by the Chief Executive Officer of Customs following an application by Boc Ltd for tariff concessions on hydrogen generator parts, reflecting the policy objective to promote the importation of goods that cannot be readily produced in Australia, thereby enhancing the competitiveness of Australian businesses. The instrument came into effect on 15 May 2009, the date the application was lodged, without adversely affecting the rights of any person other than the Commonwealth, and providing importers with the opportunity to apply for duty refunds for goods imported since the effective date.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the procedure for making Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This process applies to any person who wishes to apply for a TCO for goods, provided that the goods are not specified in section 269SJ of the Act, which includes those that cannot be subject to a TCO. An application is considered under the core criteria if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged, as defined by sections 269C, 269D, and 269E of the Act. If the CEO is satisfied that the application meets these criteria, they must make a written TCO order, as stated in section 269P(3). For instance, TCO No. 0916642 was issued on 24 July 2009 for certain hydrogen generator parts, effectively granting them a free rate of duty under item 50 of Schedule 4 to the Tariff. The TCO does not affect existing rights or impose liabilities on any person other than the Commonwealth, and it comes into force on the date the application was lodged, which in this case was 15 May 2009.
Key Provisions
The main operative sections of the Customs Act 1901 (section 269C) establish the criteria that must be met for an application for a Tariff Concession Order (TCO) to be approved. A TCO application meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Section 269P(3) states that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must make a written order (a TCO) that declares the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This means the goods will be exempt from the general rate of duty, which is 5% for the specified hydrogen generator parts, and instead will be subject to a duty-free rate (section 269P(3)).
The Act imposes several obligations and requirements on parties applying for a TCO. Firstly, an applicant must ensure that their application is not in respect of goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Additionally, the applicant must demonstrate that no substitutable goods were produced in Australia on the day the application was lodged, as per section 269C. The CEO must also publish a notice in the Gazette inviting any person who believes the TCO should not be made to lodge a submission, as required by subsection 269K(1). If no submissions are received, the CEO must proceed with making the TCO.
Failure to comply with the provisions of the Customs Act 1901 regarding TCOs can result in legal consequences. While the explanatory statement does not explicitly list offences or penalties for breach, it is reasonable to infer that any non-compliance with the Act's requirements could lead to civil or criminal penalties as per other sections of the Customs Act. These penalties may include fines or imprisonment, depending on the nature and severity of the breach. The specific maximum penalties would be determined by the relevant provisions of the Customs Act and any applicable regulations.
The commencement of TCO No. 0916642 is governed by subsection 269S(1), which states that a TCO is deemed to come into force on the day the application for the TCO was lodged. Therefore, TCO No. 0916642 is taken to have come into force on 15 May 2009. Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities in respect of anything done or omitted to be done before the date of registration. This means that the rights of importers will be beneficially affected, and they can apply for a refund of duty on goods imported since the day the TCO came into force under paragraph 126(1)(r) of the Regulations.