EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0922496
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.
Rinnai Australia applied for a TCO in respect of certain riser fins tube assembly on 30 June 2009.
Instrument
TCO No 0922496 was made on 25 September 2009. It declares that those certain riser fins tube assembly 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. 0922496 is taken to have come into force on 30 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, enacted by the Commonwealth Parliament, establishes a framework for the administration of customs duties and includes provisions for the making of Tariff Concession Orders (TCOs). The Act, particularly under Part XVA, allows the Chief Executive Officer of Customs to grant tariff concessions on goods, thereby reducing the applicable customs duty. The primary objective of the Act in this context is to facilitate the import of goods that are not produced domestically by providing a lower duty rate. This ensures that consumers and businesses can access these goods at a reduced cost, thereby supporting economic activity and consumer choice. The Tariff Concession Instrument No. 0922496, made on 25 September 2009, exemplifies the application of this legislative framework. It was introduced to address Rinnai Australia's application for a tariff concession on certain riser fins tube assemblies, recognising that no substitutable goods were produced in Australia at the time of application. This specific TCO resulted in the duty on these goods being reduced from 5% to free, effective from 30 June 2009.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs. This legislation applies to any person or entity seeking a lower rate of customs duty for goods by applying for a TCO. The application process is contingent upon the goods not being specified in section 269SJ of the Act, which details those goods ineligible for a TCO. The scope of the Act extends to industries reliant on imported goods, particularly those where local production does not meet the same specifications or capabilities. Geographically, the Act operates under the Commonwealth jurisdiction, but its effects are felt nationally, impacting importers and the broader economy by potentially lowering costs and increasing competitiveness of imported goods. The Act does not impose any liabilities on individuals or entities, and it explicitly protects the rights of persons other than the Commonwealth from being adversely affected by the TCO. The instrument, TCO No. 0922496, exemplifies this by providing a tariff concession for specific riser fins tube assemblies, effectively setting their duty rate to free, whereas the general rate is 5%. This application reflects the Act's intent to support economic efficiency and industry needs through strategic tariff adjustments.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0922496 are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. If the CEO is satisfied that the application meets the core criteria, which are outlined in section 269C, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed rate of duty. Section 269P(3) mandates that if the CEO is satisfied that no substitutable goods were produced in Australia on the day the application was lodged, they must make a TCO. This TCO, as seen in TCO No. 0922496, declares that the specified goods are subject to a zero rate of duty, as opposed to the general rate of duty.
The obligations imposed by the Act on the parties or entities it governs primarily involve the process of applying for a TCO. Section 269K(1) requires the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested persons to lodge submissions if they believe the TCO should not be made. This ensures transparency and allows for stakeholder input before the TCO is finalised. In the case of TCO No. 0922496, no submissions were received in response to the Gazette notice, indicating no opposition to the concession.
Under the Act, breaches of the requirements to correctly apply for and make TCOs can lead to civil or criminal consequences. For example, if a person knowingly provides false or misleading information in a TCO application, they may be subject to penalties under section 281D of the Customs Act, which can include fines of up to $22,200 for individuals and $111,000 for corporations, depending on the severity and intent of the breach. Additionally, the CEO has the authority to impose administrative penalties if the concession granted by the TCO is misused, which could further compound the penalties imposed under the Act.