EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0918136
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.
Deloitte Touche Tohmatsu applied for a TCO in respect of certain distilling or rectifying plant cracking units on 28 May 2009.
Instrument
TCO No 0918136 was made on 21 August 2009. It declares that those certain distilling or rectifying plant cracking units 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. 0918136 is taken to have come into force on 28 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 and provides the framework for the administration of customs and excise in Australia. This Act aims to regulate the importation and exportation of goods, ensuring the collection of appropriate duties and taxes. One of the mechanisms within the Customs Act is the Tariff Concession Order (TCO) scheme, introduced to address the issue of applying reduced customs duties on specific goods that are not produced in Australia and for which there are no suitable domestic substitutes. The CEO of Customs is empowered to grant these concessions if certain criteria are met, facilitating smoother trade and potentially lowering costs for importers. The process includes a requirement for public consultation to ensure transparency and to allow for any objections to be raised before a concession is granted. The explanatory statement for Tariff Concession Instrument No. 0918136 illustrates this process in action, where a TCO was issued for certain distilling or rectifying plant cracking units, reflecting the policy objective of supporting industries that rely on importing specialised equipment not manufactured domestically.
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 (CEO). This legislative framework applies to individuals or entities that wish to apply for a TCO for goods that are not already specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The Act applies to transactions involving the importation of goods for which a tariff concession is sought to reduce the applicable customs duty. The geographic reach of this Act is national, as it operates under the authority of the Commonwealth of Australia. A TCO application is subject to core criteria outlined in the Act, including the condition that no substitutable goods were produced in Australia on the day the application was lodged. The CEO must make a written order (a TCO) if satisfied that the application meets these criteria. The CEO has the discretion to extend or restrict the application of a TCO through subordinate instruments, ensuring flexibility in the administration of the Act. Notably, the TCO does not affect the rights of any person, except the Commonwealth, as to disadvantage them or impose liabilities for actions taken before the TCO's effective date.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0918136 under the Customs Act 1901 (section 269F) allow the Chief Executive Officer (CEO) of Customs to make a Tariff Concession Order (TCO) in respect of goods if certain criteria are met. Specifically, section 269C requires that the application for a TCO meets the core criteria, which include the condition that no substitutable goods are produced in Australia on the day the application is lodged (section 269D and 269E). If the CEO determines that the application meets these criteria, a written TCO is issued (section 269P(3)). For example, the CEO issued TCO No. 0918136 on 21 August 2009 for certain distilling or rectifying plant cracking units, applying a zero-rate duty instead of the general 5% rate.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to assess the validity of TCO applications based on the core criteria and to consult with the public if necessary. The CEO must publish a notice in the Gazette inviting submissions if the application is deemed valid (subsection 269K(1)). In this case, no submissions were received by the CEO regarding the application for TCO No. 0918136. Additionally, the Act mandates that the TCO does not affect the rights of any person other than the Commonwealth as at the date of registration, ensuring that existing rights are not disadvantaged or new liabilities imposed (subsection 269S(1)).
There are no specific offences, penalties, or consequences outlined in the Act for breach of the TCO provisions. However, the implications of failing to comply with the conditions for a TCO could lead to disputes over duty refunds or obligations. Importers who import goods after the TCO is effective can apply for a refund of duty under the Regulations (paragraph 126(1)(r)), and any failure to comply with these provisions could result in administrative or legal challenges regarding the validity of the TCO or the duty applied.