EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0938986
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.
Dematic Pty Ltd applied for a TCO in respect of certain computer server data centre cooling machines on 16 October 2009.
Instrument
TCO No 0938986 was made on 08 January 2010. It declares that those certain computer server data centre cooling machines 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. 0938986 is taken to have come into force on 16 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, enacted by the Parliament of Australia, governs the administration of customs and excise laws, including the regulation of imports and exports. One notable feature of the Act is the inclusion of Part XVA, which establishes a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The 2010 Explanatory Statement for Tariff Concession Instrument No. 0938986 under this Act details a specific instance where a TCO was granted for certain computer server data centre cooling machines, significantly reducing their duty rate from 5% to free. This concession was implemented to address the gap where such specialised equipment was not being produced domestically, ensuring that businesses could access necessary goods at a reduced cost. The policy objective of this measure is to facilitate the import of goods that are not produced in Australia, thereby supporting industry competitiveness and innovation without imposing any liabilities on importers or disadvantaging existing rights.
Scope and Application
The Customs Act 1901, specifically through Part XVA, outlines the framework for Tariff Concession Orders (TCOs), which the Chief Executive Officer of Customs may issue to lower the rate of customs duty on certain goods. This legislation applies to any individual or entity that seeks to benefit from reduced customs duties on specific goods by applying for a TCO, provided the application adheres to the criteria set out in the Act. The geographic reach of the Act is national, as it operates under the Commonwealth’s jurisdiction, thereby affecting all states and territories within Australia. The application process for a TCO excludes goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. If the CEO determines that the application meets the core criteria, as outlined in sections 269C and 269D, a TCO is issued, granting tariff concessions on the specified goods. The application and issuance of TCOs can be further regulated through subordinate instruments, allowing for detailed specifications on the types of goods and conditions applicable to each concession.
Key Provisions
The Customs Act 1901, as modified by Tariff Concession Order No. 0938986, introduces tariff concessions for specific goods, in this case certain computer server data centre cooling machines (section 269F). This concession means that the general customs duty rate of 5% is waived for these machines, making them duty-free (section 269P(3)). The CEO of Customs must assess applications to ensure they meet the core criteria, specifically that no substitutable goods are produced in Australia at the time of application (section 269C). If satisfied, the CEO issues a written order, or Tariff Concession Order (section 269P(3)).
Under the Act, the CEO has the obligation to evaluate each application for a Tariff Concession Order to determine if it meets the core criteria. This involves checking whether substitutable goods are produced in Australia at the time of the application (section 269C). If no such goods are found, the CEO is mandated to issue a written order, which is the Tariff Concession Order itself (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit their views on the application (subsection 269K(1)). In the case of TCO No. 0938986, no submissions were received, and the order was published on 08 January 2010.
Failure to comply with the provisions of the Customs Act 1901 can result in civil and criminal consequences. For example, if an entity fails to adhere to the requirements of a Tariff Concession Order, they may face penalties under the Customs Act and potentially other relevant legislation. The exact penalties for breaches can vary but may include fines or imprisonment, depending on the severity and intent behind the breach. It is essential for entities governed by this legislation to ensure strict compliance to avoid such repercussions.
Tariff Concession Order No. 0938986 came into effect on the date the application was lodged, 16 October 2009 (subsection 269S(1)). This means that any importation of the specified cooling machines from this date onwards would be eligible for the duty-free concession. Importantly, the order does not retroactively affect any rights or impose liabilities on persons other than the Commonwealth in relation to actions taken before the order's effective date. Importers can benefit from this by applying for a refund of duties paid on these goods imported since the order's commencement date (paragraph 126(1)(r) of the Regulations).