EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0937986
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.
Valve Sales Australia applied for a TCO in respect of certain side entry ball valves on 08 October 2009.
Instrument
TCO No 0937986 was made on 30 December 2009. It declares that those certain side entry ball 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. 0937986 is taken to have come into force on 08 October 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 amended to introduce a scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs (CEO). The Tariff Concession Instrument No. 0937986, enacted in 2010, addresses the need for tariff concessions by allowing the CEO to apply a lower rate of customs duty to goods specified in a TCO. This legislative instrument was introduced by the Australian Government to provide relief to businesses that import goods not produced in Australia, thereby promoting fair trade practices and supporting industry competitiveness. The CEO is required to assess applications against specific criteria, such as the absence of substitutable goods produced in Australia, before granting a TCO. The process ensures that the rights of importers are protected and that no adverse effects are imposed on other parties prior to the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 0937986 under the Customs Act 1901 pertains to the establishment of Tariff Concession Orders (TCOs) that apply to specific goods, in this case certain side entry ball valves. This instrument is relevant to entities or individuals who apply for and are granted such concessions, effectively lowering the rate of customs duty on these goods from the general rate of 5% to zero. The application and implementation of this concession are managed by the Chief Executive Officer of Customs, who must be satisfied that the application meets the stipulated core criteria, specifically that no substitutable goods are produced in Australia at the time of application. This Act applies at a national level within Australia, governing the import duties associated with these goods. There are no exclusions or exemptions outlined in this specific instrument, and it does not impose any liabilities on persons other than the Commonwealth. The TCO is effective from the date the application was lodged, offering beneficial rights to importers who may apply for a refund of duty on goods imported since the concession came into force.
Key Provisions
The key sections of this legislation include sections 269C, 269F, and 269P of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods, provided the goods are not specified in section 269SJ. Section 269C sets out the core criteria for a TCO, which must be met for the CEO to make an order. Specifically, the CEO must be satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, section 269P(3) requires the CEO to make a written order, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by this legislation primarily rest on the CEO, who is tasked with assessing TCO applications against the core criteria outlined in section 269C. Upon receiving an application, the CEO must ensure that the goods are not listed in section 269SJ, and then determine if the core criteria are satisfied. If satisfied, the CEO must make a written TCO, specifying the applicable tariff item. Additionally, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to submit any objections or submissions regarding the TCO application. This transparency measure ensures that all stakeholders have an opportunity to voice their concerns before the TCO is made.
There are no specific offences or penalties outlined in this legislation for breaching the TCO provisions. However, the consequences of failing to comply with the Act's requirements could include the invalidation of a TCO or potential legal action from parties adversely affected by the TCO. For example, if a TCO is found to have been incorrectly issued due to failure to adhere to the core criteria, it could be subject to judicial review and potentially overturned. While this legislation does not impose financial penalties, the legal and reputational risks associated with non-compliance are significant.
The commencement of TCO No. 0937986 is effective from the date the application was lodged, as per subsection 269S(1) of the Customs Act 1901. Importantly, the TCO does not retroactively affect any actions or liabilities incurred before its effective date. Instead, it prospectively benefits importers by allowing them to apply for duty refunds on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations. This ensures that the rights of existing parties are protected and that the TCO only impacts future transactions.
The explanatory statement also clarifies that the TCO does not disadvantage any person or impose new liabilities on them. It specifically highlights that the rights of importers are beneficially affected, as they can apply for duty refunds on goods imported since the TCO's effective date. This provision aims to ensure that the TCO operates fairly and does not unfairly burden any party. The statement underscores the legislative intent to provide tariff relief without imposing additional burdens on those already engaged in importing activities prior to the TCO's enactment.