EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0939173
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.
Ecowaterboxx Pty Ltd applied for a TCO in respect of certain water storage modules on 19 October 2009.
Instrument
TCO No 0939173 was made on 19 February 2010. It declares that those certain water storage modules 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. 0939173 is taken to have come into force on 19 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 enacted by the Australian Parliament and establishes a framework for the administration of customs duties and tariffs. One notable aspect of the Act is the provision for Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain goods. This legislative instrument, Tariff Concession Instrument No. 0939173, was introduced to address a specific gap in the tariff regime by providing tariff concessions for certain water storage modules, effectively reducing the duty on these goods from the general rate of 5% to zero. The instrument was made by the Chief Executive Officer of Customs following an application by Ecowaterboxx Pty Ltd, and it came into force on the date the application was lodged, 19 October 2009. The policy objective underpinning this concession is to support the local production and use of substitutable goods, ensuring that Australian businesses are not disadvantaged when no equivalent goods are produced domestically. The instrument was subject to a consultation process, although no submissions were received in response to the published notice inviting interested parties to comment on the proposed concession.
Scope and Application
The Tariff Concession Instrument No. 0939173 under the Customs Act 1901 applies to specific goods, in this case, certain water storage modules, for which a Tariff Concession Order (TCO) has been made. The Act allows for the CEO of Customs to issue TCOs to provide a lower rate of customs duty on goods that meet certain criteria. The instrument applies to the entity that applied for the concession, Ecowaterboxx Pty Ltd, and to any importers of the specified goods. The scope of the Act is Commonwealth-wide, as it is an instrument made under the authority of the federal Customs Act. The application of this TCO is subject to the conditions outlined in Part XVA of the Customs Act 1901, and the instrument itself is subject to exclusions and criteria as specified in the Act, including the requirement that no substitutable goods are produced in Australia in the ordinary course of business. The TCO does not disadvantage any person and does not impose any new liabilities; however, it does entitle eligible importers to a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Instrument No. 0939173, under the Customs Act 1901, is primarily concerned with the application and approval process for Tariff Concession Orders (TCOs). The Act allows for the application of lower rates of customs duty on goods that are subject to a TCO (sections 269F, 269C, 269P(3)). Specifically, section 269C requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business for the goods in question. The CEO must then make a written order declaring that the goods are subject to a prescribed item in Schedule 4 to the Customs Tariff Act 1995, with a reduced or free rate of duty (section 269P(3)).
The obligations under this Act are mainly procedural and involve the CEO's role in assessing TCO applications. According to the Act, the CEO must ensure that the application is not for goods specified in section 269SJ, which excludes certain items from TCO consideration. If the application is deemed valid, the CEO must make a TCO if the core criteria are met, which includes verifying that no substitutable goods are produced in Australia (section 269C). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions on the application, although no submissions were received for this particular TCO (subsection 269K(1)).
In terms of penalties and consequences, the Act does not explicitly detail specific offences or penalties for breaches of the TCO provisions. However, the failure to comply with the conditions set forth in the TCO could potentially lead to disputes regarding the correct application of duty rates, with possible implications for the importer's liability. The Act ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the TCO, and it does not impose any liabilities on any person in respect of actions taken before the TCO's effective date (subsection 269S(1)). Importers, however, have the right to apply for a refund of duty paid on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations.