EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0925662
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 wastewater treatment plant on 20 July 2009.
Instrument
TCO No 0925662 was made on 09 October 2009. It declares that those certain wastewater treatment 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. 0925662 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, enacted by the Australian Parliament, provides the legislative framework for the administration of customs and excise in Australia. One of its key components is Part XVA, which allows for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders offer lower rates of customs duty on specified goods, provided certain criteria are met. The primary objective of the TCO scheme is to facilitate the import of goods that are not domestically produced, thereby promoting trade and economic efficiency. The Explanatory Statement for Tariff Concession Instrument No. 0925662 clarifies that the CEO is mandated to consider applications for TCOs, ensuring they align with the statutory criteria set out in the Act. In this instance, the CEO was satisfied that no substitutable goods were produced in Australia for certain wastewater treatment plants, leading to the issuance of TCO No. 0925662, which effectively granted a free duty rate on these specific goods. The instrument was effective from the date of the application, 20 July 2009, and did not disadvantage any existing rights or impose new liabilities on non-Commonwealth entities.
Scope and Application
The Tariff Concession Instrument No. 0925662 under the Customs Act 1901 applies to specific wastewater treatment plant goods for which Water Corporation applied on 20 July 2009. The instrument, made by the Chief Executive Officer of Customs on 9 October 2009, provides for a tariff concession order (TCO) that lowers the customs duty rate from the general 5% to free for these goods. The Act applies to entities such as Water Corporation that apply for TCOs in respect of goods, and the CEO who has the authority to make or refuse these orders based on the criteria set out in the Act. The geographic scope of the Act extends to the Commonwealth of Australia, and the TCO specifically pertains to the goods in question. Exclusions include goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The Act may extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which defines the prescribed tariff items for goods. The TCO does not affect the rights of any person other than the Commonwealth in relation to actions taken before the registration of the order, and it allows importers to apply for a refund of duty on goods imported since the TCO's effective date.
Key Provisions
The key operative sections of the Customs Act 1901, particularly in relation to the Tariff Concession Order (TCO) in question, are sections 269C, 269F, and 269SJ (subsection 269P(3)). Section 269F enables an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of specified goods, provided that those goods are not excluded under section 269SJ. The CEO must determine if the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
These sections impose specific obligations on the CEO and applicants. Upon receiving an application, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not proceed (subsection 269K(1)). In this instance, no submissions were received. The CEO's duty is to ensure that the application is valid and meets the criteria before issuing a TCO. Once a TCO is issued, the goods specified in the order are subject to a lower rate of customs duty, as outlined in the relevant schedule of the Customs Tariff Act 1995.
In the case of non-compliance or improper application for a TCO, the Act imposes penalties and consequences. While the explanatory statement does not explicitly state the penalties for breaches, under the broader Customs Act, there are provisions for both civil and criminal penalties. Civil penalties can include fines and the recovery of unpaid duty. Criminal penalties can include imprisonment, reflecting the seriousness of non-compliance with customs regulations. The exact penalties would depend on the specific breach and the severity of the offence under the broader customs legislation.
The TCO itself, once issued, affects the rights of importers by providing them with the opportunity to apply for a refund of duty on goods imported since the date the TCO was taken to have come into force. This is specified under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not disadvantage any person by affecting their rights as at the date of registration or imposing liabilities in respect of actions taken before the registration date. The focus is on prospective benefits for importers without retrospective imposition of liabilities.