EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0925660
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 water pumping plant on 20 July 2009.
Instrument
TCO No 0925660 was made on 09 October 2009. It declares that those certain water pumping 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. 0925660 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 amended by the Tariff Concession Instrument No. 0925660, enacted in 2010, to address a gap in tariff concessions for certain imported goods. This instrument was created to provide tariff concessions for goods that are not produced in Australia, ensuring that businesses importing such goods are not subject to higher customs duties. The instrument was developed by the Chief Executive Officer of Customs in accordance with the Act’s provisions, and it allows for a more streamlined import process by reducing the duty rates for specific goods, in this case, certain water pumping plant. The instrument was introduced without any adverse submissions, reflecting a consensus that the tariff concessions were appropriate. The policy objective is to facilitate the importation of goods that are not locally produced, thereby supporting businesses that rely on importing these items for their operations.
Scope and Application
The Tariff Concession Instrument No. 0925660 applies to the goods specified in the instrument, namely certain water pumping plant, and is subject to the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The Act facilitates the application for Tariff Concession Orders (TCOs) by entities such as Water Corporation, provided the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from tariff concessions. The CEO of Customs must determine if the application meets the core criteria, specifically whether substitutable goods are produced in Australia, before making a TCO. The TCO applies on a Commonwealth level, influencing customs duty rates specified in the Customs Tariff. The instrument excludes any disadvantages to third parties and imposes no liabilities on persons other than the Commonwealth. The application of the TCO is effective from the date the application was lodged, in this case, 20 July 2009. The scope and application of this TCO can be further defined and potentially extended through subordinate instruments as necessary.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0925660 under the Customs Act 1901 (sections 269C, 269B, 269E, 269P(3), and 269SJ) allow the Chief Executive Officer of Customs (CEO) to make a Tariff Concession Order (TCO) for certain goods, provided specific criteria are met. A TCO application can be made under section 269F, and if the CEO is satisfied that the application is valid and meets the core criteria outlined in section 269C, they must issue a written order (section 269P(3)). Section 269B defines "goods produced in Australia" and "ordinary course of business," while section 269E explains "substitutable goods," which are goods produced in Australia that can be used in the same way as the goods subject to the TCO application. The CEO must ensure that no substitutable goods are produced in Australia on the day the application was lodged, and if so, a TCO can be issued.
The Act imposes several obligations and requirements on the parties involved. Firstly, applicants, such as Water Corporation in this case, must submit a valid application for a TCO, ensuring all criteria are met (section 269F). The CEO must then assess the application against the core criteria (section 269C) and make a decision based on the information provided. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)), although in this case, no submissions were received. The CEO's decision to issue or not issue a TCO is a critical step, as it directly affects the duty rates applicable to the specified goods.
Breaches of the provisions under this Act can result in civil and criminal consequences. If an entity fails to comply with the requirements for applying for a TCO or if the CEO issues a TCO improperly, this could lead to legal challenges or penalties. While the explanatory statement does not detail specific maximum penalties, under the broader Customs Act, penalties for non-compliance can include fines and, in serious cases, imprisonment. The precise consequences would depend on the nature and severity of the breach, as well as any relevant case law or statutory provisions. The Act ensures that the rights of non-Commonwealth entities are protected, and any liabilities are not imposed retroactively, safeguarding the interests of all involved parties.