EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0926581
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.
Rio Tinto Aluminium applied for a TCO in respect of certain gas turbine water cooling skids on 24 July 2009.
Instrument
TCO No 0926581 was made on 09 October 2009. It declares that those certain gas turbine water cooling skids 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. 0926581 is taken to have come into force on 24 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 a framework for the administration of customs and excise in Australia. One of the significant features of the Act is the provision for Tariff Concession Orders (TCOs), which allow for the reduction or exemption of customs duty on certain imported goods. The introduction of TCOs aims to address the gap in providing tariff relief to ensure that Australian industries can access necessary imported goods at a lower cost, thereby enhancing their competitiveness. The Explanatory Statement for Tariff Concession Instrument No. 0926581, made under the authority of the Customs Act 1901, illustrates the process of applying for and granting a TCO. In this instance, Rio Tinto Aluminium applied for a TCO for certain gas turbine water cooling skids, which was granted after it was determined that no substitutable goods were produced in Australia. This decision aligns with the policy objective of the Act to facilitate the import of goods that are not domestically produced, thus benefiting industries and potentially lowering costs for consumers.
Scope and Application
The Tariff Concession Instrument No. 0926581 applies to the entity that submitted the application for the concession, in this instance Rio Tinto Aluminium, as well as to the goods specified in the application, namely certain gas turbine water cooling skids. This instrument operates under the Customs Act 1901 and specifically within Part XVA which governs Tariff Concession Orders (TCOs). The scope of this legislation is limited to the Commonwealth jurisdiction and pertains to the regulation of customs duties on imported goods. The TCO provides a concession, effectively reducing the duty from 5% to free, provided that no substitutable goods are produced in Australia. This is determined by the Chief Executive Officer of Customs who assesses applications against the criteria outlined in the Act, ensuring that the application is neither for goods excluded under section 269SJ nor for goods for which substitutable products are domestically produced. The application of this TCO does not extend to impose any liabilities or disadvantage any person other than the Commonwealth, and importantly, it allows for the rights of importers to be beneficially affected by enabling them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0926581 under the Customs Act 1901 (the Act) concern the application and processing of Tariff Concession Orders (TCOs) for certain gas turbine water cooling skids. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO. If the application is for goods that are not specified in section 269SJ (goods that cannot be subject to a TCO), the CEO must determine if the application meets the core criteria under section 269C. This involves assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269D and 269E). If the CEO is satisfied, they must make a written order (a TCO) under section 269P(3), declaring the goods subject to a lower rate of customs duty.
The Act imposes several obligations and requirements on the parties involved. The applicant must ensure their application is valid and meets the core criteria. The CEO is required to publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). The CEO must also assess whether the application meets the core criteria and make a decision accordingly. The Tariff Concession Instrument No. 0926581 was made on 10 September 2009, declaring that the gas turbine water cooling skids are subject to a free rate of duty as no substitutable goods were produced in Australia.
For breaches of the requirements set out in the Act, the legislation provides for both civil and criminal consequences. Although specific offences and penalties are not detailed in the explanatory statement, under the general provisions of the Customs Act 1901, breaches of customs laws can lead to substantial penalties. Civil penalties can include fines and pecuniary penalties, while criminal penalties can include imprisonment, reflecting the seriousness of non-compliance with customs regulations. The exact penalties depend on the nature and severity of the breach, but they can be significant, underscoring the importance of adhering to the Act's requirements.
The Tariff Concession Instrument No. 0926581 ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any liabilities on any person and does not affect the rights of a person (other than the Commonwealth) in a way that disadvantages them or imposes liabilities for actions taken before the TCO was registered. This ensures that the legislative framework is fair and balanced, protecting the interests of all parties involved while facilitating legitimate trade practices.