EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0932809
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 Ltd applied for a TCO in respect of certain pressure relief valves on 04 September 2009.
Instrument
TCO No 0932809 was made on 20 November 2009. It declares that those certain pressure relief valves 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. 0932809 is taken to have come into force on 04 September 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 under which Tariff Concession Orders (TCOs) can be made to apply a lower rate of customs duty on certain goods. The Act was introduced to address the gap in providing concessions on imported goods where no substitutable Australian-made products exist. The Tariff Concession Instrument No. 0932809, made under the authority of the Act, declares that specific pressure relief valves are subject to a zero rate of customs duty, having previously been subject to a general rate of 5%. This instrument was created in response to an application from Rio Tinto Aluminium Ltd, following satisfaction by the Chief Executive Officer of Customs that no substitutable goods were produced in Australia. The policy objective of this instrument is to encourage the importation of goods where no domestic alternatives exist, thereby supporting industry competitiveness and economic efficiency.
Scope and Application
The Customs Act 1901 applies to the Tariff Concession Orders (TCO) scheme, which provides for lower rates of customs duty on certain goods. Under this scheme, the Chief Executive Officer (CEO) of Customs may issue a TCO to a person or entity that applies for tariff concessions, provided the goods in question are not specified in section 269SJ of the Act, which lists those goods that cannot be subject to a TCO. The application must meet the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied with the application, they are required to 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 applies. The CEO must also publish a notice in the Gazette inviting any interested person to lodge a submission if they believe there are reasons why the TCO should not be made. The CEO did not receive any submissions in response to the published notice for TCO No. 0932809. The TCO is taken to have come into force on the day the application was lodged. 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.
Key Provisions
The Customs Act 1901, specifically under Part XVA, allows the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCOs) that apply lower rates of customs duty on certain goods (sections 269C, 269F). An application for a TCO can be submitted to the CEO by any person, provided the goods are not specified in section 269SJ, which lists those goods that are ineligible for a TCO. If the CEO determines that the application meets the core criteria outlined in section 269C, they must issue a written order (section 269P(3)). This process was followed by Rio Tinto Aluminium Ltd, who applied for a TCO on certain pressure relief valves on 4 September 2009, and subsequently received TCO No. 0932809 on 20 November 2009, which applies a 5% duty rate to these goods.
The Act imposes several obligations on the CEO in processing TCO applications. Once an application is accepted as valid, the CEO must publish a notice in the Gazette, inviting any interested party to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). Additionally, the CEO must ensure that the application meets the core criteria, particularly that no substitutable goods are produced in Australia at the time of the application (section 269C). In the case of Rio Tinto Aluminium Ltd, no submissions were received by the CEO, indicating that no party contested the granting of the TCO.
Failure to comply with the provisions of the Customs Act 1901 regarding TCOs can result in civil or criminal penalties. While the Act does not specify penalties for non-compliance with TCOs, breaches of other sections of the Customs Act can result in fines up to $22,000 for individuals and $110,000 for corporations, or imprisonment for up to five years, or both, depending on the severity and intent of the breach (subsection 243AD(2)). It is important for all parties involved to adhere to the Act's requirements to avoid these consequences.