EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0919016
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.
Dq Holdings Pty Ltd applied for a TCO in respect of certain subsea guide bases on 05 June 2009.
Instrument
TCO No 0919016 was made on 28 August 2009. It declares that those certain subsea guide bases 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. 0919016 is taken to have come into force on 05 June 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 to provide for the administration of customs and excise and includes provisions for Tariff Concession Orders (TCOs) which allow for lower rates of customs duty on certain goods. The problem this legislation addresses is the need for a mechanism to provide tariff relief for goods that are not produced domestically and for which there are no suitable substitutes. The Tariff Concession Instrument No. 0919016, made under the authority of the Customs Act 1901, was introduced to provide a concession on the customs duty for certain subsea guide bases, following an application by Dq Holdings Pty Ltd. The instrument was created after determining that no substitutable goods were produced in Australia, thus meeting the core criteria for a TCO as outlined in the Act. The policy objective of the TCO is to provide tariff relief to importers of the specified goods, enhancing their competitive position without disadvantaging other stakeholders or imposing new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0919016, made under the Customs Act 1901, applies specifically to certain subsea guide bases, as declared in the instrument. This legislation operates within the Commonwealth jurisdiction, facilitating tariff concessions for goods that meet particular criteria, notably where no substitutable goods are produced in Australia in the ordinary course of business. The instrument was made in response to an application by Dq Holdings Pty Ltd on 05 June 2009, and it came into force on the same day. The instrument effectively reduces the general rate of duty, which is 5%, to free for the specified goods, thereby providing a benefit to importers of these goods who may apply for a refund of duty paid on imports since the instrument's effective date. Notably, the instrument does not disadvantage any person other than the Commonwealth nor impose any new liabilities, ensuring that it only positively affects the rights of importers.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, 269P and 269S of the Customs Act 1901 (the Act), which together establish the framework for the creation and implementation of Tariff Concession Orders (TCOs). Section 269F allows for an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. Section 269C sets out the core criteria that must be met for the CEO to consider a TCO application. If the CEO is satisfied that the application meets these criteria, section 269P requires the CEO to make a written order, declaring the goods subject to the application as eligible for a lower rate of customs duty. Section 269S specifies that a TCO comes into force on the day on which the application was lodged.
The Act imposes several obligations on parties involved in the process of applying for and receiving a TCO. An applicant must ensure that the goods for which the TCO is sought are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO must assess whether the application meets the core criteria specified in section 269C. This involves determining whether no substitutable goods were produced in Australia on the day the application was lodged. If the CEO finds that the application meets the criteria, they must make a written order under section 269P, declaring the goods eligible for the tariff concession. Additionally, under section 269K, the CEO is required to publish a notice in the Gazette inviting any person to lodge a submission if they believe the TCO should not be made.
There are no explicit offences, penalties, or civil/criminal consequences outlined in this legislation for breach of the provisions related to TCOs. However, the Act does provide mechanisms for ensuring compliance and addressing any potential issues. For example, if a TCO is found to be improperly granted, it could be subject to review or revocation. The Act also provides for refunds of duty under Regulation 126(1)(r) for importers of goods subject to a TCO. This means that if a TCO is later found to be incorrectly applied, importers can seek refunds for duties paid under the incorrect tariff rate. The primary consequence of breaching the conditions for a TCO would be the potential for financial liability in the form of repaying duties that were wrongly remitted.