EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0928220
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.
Firesense Pty Ltd applied for a TCO in respect of certain flow switch testers on 04 August 2009.
Instrument
TCO No 0928220 was made on 16 October 2009. It declares that those certain flow switch testers 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. 0928220 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, enacted by the Commonwealth Parliament, addresses the need for a streamlined process to provide tariff concessions for certain imported goods, thereby encouraging trade and supporting domestic industries. This Act enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce or eliminate customs duties on specified goods, provided that no substitutable goods are produced in Australia. The policy objective is to facilitate the import of goods that are not domestically manufactured, thereby supporting market competition and consumer choice without imposing additional burdens or liabilities on non-Commonwealth entities. In line with this objective, the Explanatory Statement details the process by which Firesense Pty Ltd successfully applied for a TCO for certain flow switch testers, resulting in a reduction of the duty rate from 5% to free. This instrument ensures that the rights of importers are positively affected, allowing them to apply for duty refunds on goods imported since the TCO's effective date, which aligns with the date the application was lodged.
Scope and Application
The Tariff Concession Instrument No. 0928220, established under Part XVA of the Customs Act 1901, applies to any person who may apply to the Chief Executive Officer of Customs for a Tariff Concession Order (TCO) concerning certain goods. This mechanism allows for a lower rate of customs duty on specific goods if the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business, in accordance with sections 269C, 269D, and 269E of the Act. Notably, the application of this Instrument is limited to goods that are not specified in section 269SJ of the Act, which outlines goods ineligible for a TCO. The scope of the Instrument is national, as it pertains to the Commonwealth's customs regime. Additionally, while the Instrument itself sets out the primary terms, the application and further details may be extended or modified by subordinate instruments or regulations, such as those detailed in the Customs Tariff Act 1995 and Customs Regulations 1999.
Key Provisions
The primary sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269K, 269P, 269S, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of specific goods. The CEO must then determine whether the application meets the core criteria specified in section 269C, which generally requires that no substitutable goods were produced in Australia at the time of the application. If the application is deemed to meet these criteria, a TCO can be made, as outlined in section 269P. The CEO is also required to publish a notice in the Gazette, inviting any interested parties to submit objections, as per section 269K.
The Customs Act 1901 imposes specific obligations on both applicants and the CEO. Applicants must ensure their applications are valid and meet the core criteria, providing necessary information to substantiate their claims. The CEO, on the other hand, must review applications thoroughly, make a decision based on the provided information, and if appropriate, issue a TCO. Additionally, the CEO must publish a notice in the Gazette and consider any submissions received in response to the notice. These obligations ensure a transparent and fair process for the issuance of TCOs.
Breaching the provisions of the Customs Act 1901 can lead to various civil or criminal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally carry significant penalties. For example, knowingly providing false information in an application for a TCO could result in civil penalties, including fines or repayment of benefits obtained through the false information. In more serious cases, criminal penalties might apply, including fines and imprisonment, depending on the severity of the breach and the intent behind it.
The Tariff Concession Order No. 0928220 specifically addresses certain flow switch testers, applying a zero percent duty rate instead of the general 5% duty. This order came into force on 04 August 2009, the date the application was lodged. The order does not affect any existing rights or liabilities of persons other than the Commonwealth and specifically benefits importers who can apply for duty refunds on imports made since the TCO's effective date. This provision ensures that the rights of importers are protected and that any financial advantages are appropriately recognised.
The explanatory statement also highlights that the process of issuing a TCO, such as TCO No. 0928220, includes a transparent consultation phase where any objections to the TCO can be lodged. In this particular case, no objections were received, leading to the straightforward issuance of the TCO. This transparency ensures that all interested parties have an opportunity to voice their concerns, contributing to a fair and balanced decision-making process.