EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0928490
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.
Allied Heat Transfer International applied for a TCO in respect of certain axial fans on 06 August 2009.
Instrument
TCO No 0928490 was made on 16 October 2009. It declares that those certain axial fans 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. 0928490 is taken to have come into force on 06 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 was enacted by the Parliament of Australia to facilitate and regulate the administration of customs and excise duties in Australia. A specific focus of this Act is the creation of a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 0928490, made in 2010, serves to address the issue of tariff concessions for certain goods by lowering the rate of customs duty for those goods specified in the order. This particular TCO, concerning certain axial fans, was introduced to provide tariff relief to Allied Heat Transfer International, which applied for the concession on 6 August 2009. The policy objective here is to ensure that Australian businesses have access to competitively priced goods, thus promoting economic efficiency and competitiveness. The CEO of Customs is mandated to consider applications for TCOs and issue them if the core criteria are met, as outlined in the Act.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework for Tariff Concession Orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO). This provision applies to any person who can apply to the CEO for a TCO in respect of goods, provided those goods do not fall under the list specified in section 269SJ of the Act which excludes certain items from eligibility for tariff concessions. A TCO application will be considered if the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged, as per sections 269C and 269D of the Act. If the CEO is satisfied that the application meets the criteria, they must issue a TCO, declaring the specific goods to which a prescribed item in Schedule 4 of the Customs Tariff Act 1995 applies, with the TCO generally coming into effect on the date the application was lodged. The Act extends its application nationally across Australia and does not disadvantage any person by affecting their rights as at the date of registration concerning actions taken before the registration date. Subordinate instruments may further refine the application of the Act but are not detailed in the provided text.
Key Provisions
The Customs Act 1901, under section 269C (referenced in the explanatory statement), requires that for an application for a Tariff Concession Order (TCO) to meet the core criteria, it must be the case that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Section 269B further clarifies that ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are defined in sections 269D, 269E, and 269F respectively. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, a TCO must be made under section 269P(3), effectively lowering the duty on the specified goods. This is precisely what occurred with Tariff Concession Instrument No. 0928490, where the CEO determined that no substitutable goods were produced in Australia for certain axial fans, leading to a TCO being issued on 16 October 2009.
The obligations imposed by the Customs Act 1901 on the parties involved are clear and specific. The CEO must assess each TCO application to ensure it does not pertain to goods listed in section 269SJ, which are ineligible for tariff concessions. Upon meeting the core criteria, the CEO is obligated to make a written TCO, as per section 269P(3). Furthermore, as per subsection 269K(1), the CEO must publish a notice in the Gazette, inviting submissions from any person who believes the TCO should not proceed. In this case, no submissions were received, simplifying the decision-making process for the CEO. The rights of importers are also protected under this framework, as TCOs do not affect pre-existing rights or impose liabilities for actions taken before the TCO’s registration date.
Breaching the provisions of the Customs Act 1901, particularly in the context of TCOs, can lead to various penalties. Although the explanatory statement does not detail specific offences or maximum penalties for non-compliance, the Act generally provides for both civil and criminal consequences. Civil penalties might include fines or compensation, while criminal penalties could involve imprisonment, reflecting the seriousness with which the Act treats violations. The consequences serve to ensure compliance and maintain the integrity of the tariff concession scheme.
In summary, the Customs Act 1901, through its provisions, facilitates the creation of TCOs that reduce customs duty on specific goods, provided they meet the core criteria and no substitutable goods are produced in Australia. The CEO’s role is central, as they must assess applications, publish notices inviting submissions, and make written orders if criteria are met. Failure to comply with these provisions can result in significant penalties, underscoring the importance of adherence to the Act’s stipulations.