EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0916937
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.
Hilti Australia applied for a TCO in respect of certain fluid flushing rock drill bits on 19 May 2009.
Instrument
TCO No 0916937 was made on 14 August 2009. It declares that those certain fluid flushing rock drill bits 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. 0916937 is taken to have come into force on 19 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 Customs Act 1901 was enacted by the Australian Parliament to regulate the import and export of goods, including the imposition of customs duty. In order to address specific economic or trade policy issues, the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can provide for reduced or free customs duty on certain goods. This is particularly relevant for industries that rely on the import of goods not produced domestically. TCO No. 0916937, made on 14 August 2009, is an example of such an order, which was applied for by Hilti Australia in respect of certain fluid flushing rock drill bits. The concession provides for these goods to be subject to a rate of duty of free, down from the general rate of 5%, on the basis that no substitutable goods were produced in Australia at the time the application was lodged. The order came into force on 19 May 2009, the date the application was submitted, and does not affect any rights or liabilities accrued before this date.
Scope and Application
The Tariff Concession Instrument No. 0916937 under the Customs Act 1901 applies to specific goods, in this case certain fluid flushing rock drill bits, which are subject to a lower rate of customs duty as declared by the Chief Executive Officer of Customs. This concession applies to goods that meet the core criteria outlined in section 269C of the Act, which includes the absence of substitutable goods produced in Australia on the day the application was lodged. The scope of the Act extends to industries involved in the production and importation of these goods, ensuring they benefit from reduced duty rates as stipulated. The geographic reach of this legislation is national, impacting all importers and relevant entities within Australia. There are exclusions for goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of this instrument is further extended or restricted through subordinate instruments, as detailed in the Customs Tariff Act 1995.
Key Provisions
The Customs Act 1901 (section 269F) allows for the application for Tariff Concession Orders (TCO) by any person who seeks to have a lower rate of customs duty applied to specific goods. The CEO of Customs has the authority to make such orders, provided that the goods are not listed in section 269SJ of the Act as ineligible for a TCO. A TCO application will meet the core criteria if, on the day it was lodged, there were no substitutable goods being produced in Australia in the ordinary course of business (section 269C). Substitutable goods, as defined in section 269D, are those produced in Australia that serve a similar purpose to the goods for which the TCO is sought. If the CEO determines that the application meets these criteria, they must issue a written order, the TCO, which specifies the reduced duty rate applicable to the goods (section 269P(3)).
In the case of Hilti Australia's application for a TCO for certain fluid flushing rock drill bits, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 0916937 on 14 August 2009. This order applied item 50 of Schedule 4 to the Customs Tariff Act 1995, reducing the general rate of duty from 5% to free. The TCO came into force on the date the application was lodged, 19 May 2009 (subsection 269S(1)), and does not affect any rights or impose liabilities on persons other than the Commonwealth in respect of actions taken before the registration date (subsection 269S(2)).
The Act mandates that the CEO must publish a notice in the Gazette inviting any interested party to submit objections to the TCO if they believe it should not be made (subsection 269K(1)). In the case of TCO No. 0916937, no such submissions were received, thus allowing the TCO to proceed without opposition. This ensures transparency and provides an opportunity for stakeholders to voice their concerns regarding the concession.
Should any party breach the provisions of the Customs Act 1901 or the related regulations, they may face legal consequences. Offences under the Act can result in civil penalties, including fines, or criminal penalties, including imprisonment, depending on the severity and intent of the breach. The specific penalties are not detailed in the explanatory statement, but they are generally commensurate with the nature and impact of the violation. Adherence to the Act and its regulations is crucial to avoid these penalties.