EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0925657
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.
Water Corporation applied for a TCO in respect of certain reverse osmosis plant on 20 July 2009.
Instrument
TCO No 0925657 was made on 09 October 2009. It declares that those certain reverse osmosis plant 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 0925657. is taken to have come into force on 20 July 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 Commonwealth Parliament to provide for the regulation of customs and excise, including the imposition of tariffs and the control of goods entering and leaving Australia. One aspect of this legislation is the scheme for Tariff Concession Orders (TCOs), which allows for the application of lower rates of customs duty on certain goods, provided they meet specific criteria. This scheme is particularly relevant for entities like Water Corporation, which sought to import reverse osmosis plant without incurring the usual customs duty. The Tariff Concession Instrument No. 0925657, issued on 9 October 2009, was introduced to address Water Corporation's application for a TCO concerning certain reverse osmosis plant, allowing these goods to be subject to a zero rate of duty as opposed to the general 5% rate. The policy objective of the TCO is to facilitate the import of goods that are not produced in Australia, thereby supporting industries that rely on imported equipment.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes the framework for Tariff Concession Orders (TCOs) which are issued by the Chief Executive Officer of Customs. These orders apply to goods that are subject to a lower rate of customs duty, provided they meet the core criteria set out in the Act. An application for a TCO can be made by any person, but the CEO must ensure that the goods in question are not specified as ineligible in section 269SJ. If the application is deemed to meet the core criteria, the CEO issues a written order that specifies the goods and the applicable tariff item from Schedule 4 of the Customs Tariff Act 1995. This particular legislation, Tariff Concession Instrument No. 0925657, was applied for by the Water Corporation concerning certain reverse osmosis plants, and it became effective from the date the application was lodged, 20 July 2009. The TCO declares that these plants are subject to item 50 of the Tariff Schedule, with a duty rate of free, down from the general rate of 5%. The CEO published a notice in the Gazette inviting submissions from any person who might have reasons against the concession, but no submissions were received. This TCO does not adversely affect any rights or impose any liabilities on persons other than the Commonwealth, and it notably benefits importers who can apply for duty refunds for goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) includes a provision for the creation of Tariff Concession Orders (TCOs), which allow for a reduced rate of customs duty on certain goods. Section 269F of the Act permits an application to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of specified goods. The CEO must then determine if the application meets the core criteria set out in section 269C, which requires that on the date of application, no substitutable goods are being produced in Australia in the ordinary course of business. If these criteria are met, the CEO must issue a written order, a TCO, as per section 269P(3). This order specifies that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby applying a reduced rate of duty.
The obligations under the Act for the CEO are to review applications for TCOs and to determine if they meet the specified criteria. This involves verifying that no substitutable goods are being produced domestically, as outlined in sections 269B, 269D, and 269E. Once the CEO is satisfied that the application is valid, they must issue a TCO and publish a notice in the Gazette inviting any interested parties to submit their views. For example, in the case of TCO No 0925657, the CEO accepted the application from Water Corporation for certain reverse osmosis plant, determined that no substitutable goods were being produced in Australia, and subsequently issued the TCO.
Breaches of the requirements or conditions specified in a TCO can lead to civil or criminal consequences. Under the Act, if a person knowingly or recklessly contravenes a TCO, they may be subject to a penalty. The specific penalties are not detailed in the explanatory statement, but generally, breaches of customs legislation can result in substantial fines and, in serious cases, imprisonment. For instance, the Act may impose penalties for fraud, misrepresentation, or failure to comply with the terms of the TCO. Additionally, any person who fails to comply with the terms of the TCO may be liable for any resulting loss or damage suffered by another party as a result of that non-compliance.