EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0928147
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.
Tytronics Development Australia applied for a TCO in respect of certain air conditioner and heater controllers on 04 August 2009.
Instrument
TCO No 0928147 was made on 09 October 2009. It declares that those certain air conditioner and heater controllers 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. 0928147 is taken to have come into force on 04 August 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, as amended, introduced a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. This scheme, detailed in Part XVA of the Act, allows for the application of a lower rate of customs duty on goods that are the subject of a TCO. The problem or gap this legislation was designed to address includes the facilitation of trade by reducing the customs duty burden on specific imported goods, provided they meet certain criteria and are not substitutable by Australian-produced goods. Enacted by the Australian Parliament, the policy objective behind these tariff concessions is to support economic competitiveness and encourage the importation of goods where local alternatives do not exist or are not economically viable.
In the case of Tariff Concession Instrument No. 0928147, the instrument was introduced to provide tariff concessions for certain air conditioner and heater controllers, recognising that no substitutable goods were produced in Australia at the time of the application. This specific measure was designed to benefit importers by potentially reducing their duty costs and ensuring that the TCO does not adversely affect existing rights or impose new liabilities on any party.
Scope and Application
The Tariff Concession Instrument No. 0928147 under the Customs Act 1901 applies to the specific goods, namely certain air conditioner and heater controllers, that are the subject of the application by Tytronics Development Australia. The application was processed by the Chief Executive Officer of Customs, who determined that the goods in question were eligible for a tariff concession order (TCO) as they did not have substitutable goods produced in Australia. This TCO provides these goods with a lower rate of customs duty, effectively free of charge, instead of the general rate of 5%. The application of the TCO is limited to the goods specified in the instrument and does not affect the rights of any person other than the Commonwealth, particularly ensuring that no person is disadvantaged or imposed with liabilities for actions prior to the registration date of the TCO. The TCO extends to the Commonwealth jurisdiction, and while it does not apply to goods specified in section 269SJ of the Act, it does not impose any additional exclusions beyond those stipulated by the Act itself. The commencement of the TCO is retroactive to the date of the application, 4 August 2009, ensuring that importers can seek refunds for duties paid on the goods since that date.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0928147 under the Customs Act 1901 (section 269F) outline the process for applying for a Tariff Concession Order (TCO). A person may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods if the goods are not specified in section 269SJ of the Act, which enumerates those goods that cannot be subject to a TCO (section 269F). The CEO must then assess if the application meets the core criteria specified in section 269C. This involves verifying that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order, i.e., a TCO, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
The obligations imposed by the Act on the parties involved, particularly the CEO, are significant. The CEO must ensure that any TCO application not involving goods specified in section 269SJ is evaluated against the core criteria in section 269C. This includes confirming that no substitutable goods were produced in Australia on the application date. Additionally, the CEO has an obligation to publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). The Act also mandates that the TCO should be taken to have come into force on the day the application was lodged (subsection 269S(1)). These provisions ensure a transparent and accountable process for granting tariff concessions.
Failure to comply with the requirements of the Act can result in various consequences. While the explanatory statement does not explicitly list offences or penalties, it is reasonable to infer that breaches of the tariff concession process could lead to legal challenges or administrative actions against the CEO for not following statutory obligations. Additionally, any misapplication of tariff concessions could result in financial penalties for the applicant, as incorrect duty payments could be subject to review and correction by Customs. The maximum penalties for such breaches would typically be determined by other relevant sections of the Customs Act 1901 or associated regulations, which could include fines or other financial penalties for non-compliance.