EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0939311
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.
Orica Australia Pty Ltd applied for a TCO in respect of certain heat exchangers on 19 October 2009.
Instrument
TCO No 0939311 was made on 19 February 2010. It declares that those certain heat exchangers 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. 0939311 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, enacted by the Australian Parliament, provides for the imposition of tariffs on imported goods. Within this framework, Part XVA of the Act facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which allow for a reduced rate of customs duty on specified goods. This mechanism was introduced to address the problem of ensuring that certain goods, which cannot be domestically produced, receive tariff relief, thereby promoting economic efficiency and supporting industries that rely on imported components. The policy objective is to facilitate the import of goods that are essential for various industries but are not produced locally, thereby reducing costs and increasing competitiveness. Instrument TCO No. 0939311, made on 19 February 2010, exemplifies this process by granting tariff concessions on specific heat exchangers to Orica Australia Pty Ltd, recognising the absence of substitutable goods produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0939311, under the Customs Act 1901, pertains to specific heat exchangers applied for by Orica Australia Pty Ltd. The Act applies to these particular goods, subject to a lower rate of customs duty if the Chief Executive Officer (CEO) of Customs determines that no substitutable goods are produced in Australia in the ordinary course of business. This assessment is made in accordance with the core criteria outlined in section 269C of the Act. The instrument is effective from the date of the application, 19 October 2009, and aims to provide tariff concessions that benefit importers by potentially allowing them to apply for a refund of duty on goods imported since the commencement date. The legislation's jurisdictional reach is within the Commonwealth of Australia, and it does not disadvantage or impose liabilities on any person other than the Commonwealth for actions taken before the registration of the TCO. This instrument is an extension of the Customs Act 1901 and is further detailed in Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The Tariff Concession Order No. 0939311 under the Customs Act 1901 (the Act) pertains specifically to certain heat exchangers, which are now subject to a zero percent rate of customs duty (Section 269P(3)). The order was made on 19 February 2010 by the Chief Executive Officer of Customs (CEO) following an application from Orica Australia Pty Ltd on 19 October 2009. The CEO concluded that no substitutable goods were produced in Australia at the time the application was made, thereby meeting the core criteria for a Tariff Concession Order (Section 269C). This decision resulted in the application of item 50 of Schedule 4 to the Customs Tariff Act 1995 to these goods, as opposed to the general rate of duty of 5%.
The Act imposes certain obligations on the parties involved. An applicant must submit an application to the CEO for a Tariff Concession Order (Section 269F). The CEO then assesses whether the application meets the core criteria and whether the goods are not specified in section 269SJ of the Act. If satisfied, the CEO must make a written order (Section 269P(3)). Additionally, once an application is accepted, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (Subsection 269K(1)). The CEO must consider these submissions in making a decision.
Failure to comply with the requirements of the Act may result in various consequences. Although the explanatory statement does not specify particular offences or penalties for non-compliance with Tariff Concession Orders, breaches of the Customs Act 1901 in general can lead to criminal charges, including fines and imprisonment. Under the Customs Act, knowingly making a false statement in an application for a Tariff Concession Order could result in penalties such as fines and imprisonment for individuals and companies. The specific penalties would depend on the nature and severity of the offence as determined by the courts.
In summary, Tariff Concession Order No. 0939311 effectively reduces the customs duty on certain heat exchangers to zero, provided the CEO determines that no substitutable goods were produced in Australia. The Act mandates that applicants submit valid applications and that the CEO consider any submissions before making a decision. While the explanatory statement does not detail specific penalties for breaches of this particular order, general provisions within the Customs Act 1901 allow for significant penalties, including fines and imprisonment, for non-compliance.