EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0940645
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 Limited applied for a TCO in respect of certain control valves on 28 October 2009.
Instrument
TCO No 0940645 was made on 15 January 2010. It declares that those certain control 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. 0940645 is taken to have come into force on 28 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 to provide for the collection of customs duties and to regulate the importation and exportation of goods. The Tariff Concession Instrument No. 0940645, enacted in 2010, was introduced to address a gap in the customs duty scheme by providing tariff concessions for specific goods, thereby reducing the customs duty burden on these goods. This instrument was made under the authority of section 269C of the Customs Act 1901, which allows the Chief Executive Officer of Customs to grant Tariff Concession Orders if certain criteria are met, such as the absence of substitutable goods produced in Australia. The policy objective of this instrument is to provide relief to businesses by lowering the customs duty rates on specific goods, in this case, certain control valves, thereby supporting the efficient operation of industries that rely on these goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply a lower rate of customs duty to specified goods. This process is available to any person who applies for a TCO for goods, provided that these goods are not specified in section 269SJ of the Act, which lists those that cannot be subject to a TCO. The application is subject to core criteria outlined in sections 269C, 269D, and 269E, including the condition 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, the CEO must make a TCO, as illustrated in TCO No. 0940645 for certain control valves, reducing the duty rate from 5% to free. The TCO applies to the goods specified in the order, which in this case is item 50 of Schedule 4 to the Customs Tariff Act 1995. The Act's jurisdictional reach is national, affecting entities and individuals involved in the importation of the specified goods across Australia. The TCO does not disadvantage any person other than the Commonwealth and does not impose any new liabilities, although it may entitle importers to a refund of duty paid on the goods since the TCO's effective date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0940645 (the Instrument) under the Customs Act 1901, specifically sections 269C, 269F, and 269P, establish the process for the Chief Executive Officer of Customs (CEO) to consider and make Tariff Concession Orders (TCOs). Section 269F allows an application to be made by any person for a TCO in respect of goods, provided those goods are not specified in section 269SJ, which outlines goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria set out in section 269C, which includes that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff).
The Act imposes several obligations on the parties involved. The CEO must ensure that the application is not in respect of goods specified in section 269SJ, assess whether the application meets the core criteria in section 269C, and if satisfied, make a TCO as per section 269P(3). Additionally, the CEO must publish a notice in the Gazette inviting any interested party to submit objections to the proposed TCO, as required by subsection 269K(1). For the applicant, the obligation is to submit a valid application that meets the criteria outlined in the Act, ensuring that the goods specified are not substitutable goods produced in Australia.
In terms of consequences, the Act does not explicitly state civil or criminal penalties for non-compliance with the TCO process itself. However, there may be implications for parties who do not adhere to the criteria or who provide misleading information in their application. Furthermore, any breach of the conditions under which a TCO is granted could potentially lead to actions for non-compliance with the Customs Act, which could result in administrative penalties. The specific consequences would depend on the nature of the breach and the discretion of the CEO in enforcing the terms of the TCO.