EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0917042
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.
Eraring Energy applied for a TCO in respect of certain low nitrogen oxide burners on 20 May 2009.
Instrument
TCO No 0917042 was made on 14 August 2009. It declares that those certain low nitrogen oxide burners 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. 0917042 is taken to have come into force on 20 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, enacted by the Australian Parliament, establishes a framework for the administration of customs and excise duties in Australia. It includes provisions for Tariff Concession Orders (TCOs) which are designed to address economic efficiency and competitiveness by allowing the Chief Executive Officer of Customs to reduce or waive customs duties on specified goods, provided that no substitutable goods are produced in Australia. The Act was introduced to provide a mechanism for the Australian government to offer tariff concessions that support industries by lowering the cost of imported goods that are essential for production but cannot be sourced domestically. The policy objective behind TCOs is to foster a competitive environment for Australian businesses by reducing the cost of necessary imports, thereby encouraging economic growth and competitiveness in the global market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This mechanism allows for a reduced rate of customs duty on specified goods, provided the application meets core criteria outlined in the Act. The primary criterion, as stated in section 269C, is the absence of substitutable goods produced in Australia on the day the application is lodged. The application process involves a review to ensure the goods in question are not excluded under section 269SJ and must be published in the Gazette to invite objections, although in this case, no objections were received. TCO No. 0917042, issued on 14 August 2009, pertains to certain low nitrogen oxide burners and was effective from 20 May 2009, the date of application, establishing a zero duty rate for these goods as they were not produced in Australia at the time. This concession benefits importers who can apply for duty refunds on imports made since the TCO's effective date, without any additional liabilities imposed on non-Commonwealth entities.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0917042 pertain to the making of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269C). The instrument specifies that the CEO of Customs must make a TCO if they are satisfied that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). This order will declare that the goods in question are subject to a lower rate of customs duty, as specified in the Tariff (section 269P(3)). For this particular instrument, TCO No. 0917042 declares that certain low nitrogen oxide burners, which are subject to a free rate of duty, were not being produced in Australia on the day the application was lodged (section 269C).
Entities governed by the Act must ensure compliance with the requirements of the TCOs, including lodging valid applications for tariff concessions and satisfying the core criteria as stipulated by the Act (sections 269C, 269K(1)). The CEO must publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made, and must take these submissions into account before making a final decision (section 269K(1)). Importers who benefit from the TCO can apply for a refund of duty on goods imported since the TCO is deemed to have come into force (section 126(1)(r) of the Regulations).
The Act does not impose specific criminal or civil penalties for breaches of the TCO itself. However, any breach of the Customs Act 1901 or related regulations could result in criminal or civil penalties. For example, knowingly making a false statement in an application for a TCO could potentially lead to penalties under section 234 of the Customs Act 1901, which imposes a penalty of up to five years imprisonment or a fine of up to 10,000 penalty units, or both, for offences involving false statements or documents. Additionally, failure to comply with the terms of the TCO could result in the imposition of duties at the general rate rather than the concessional rate.