EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941087
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.
Areva T&D Australia Limited applied for a TCO in respect of certain transformers on 30 October 2009.
Instrument
TCO No 0941087 was made on 15 January 2010. It declares that those certain transformers 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. 0941087 is taken to have come into force on 30 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 a framework for the administration of customs and excise, including the establishment of a scheme for Tariff Concession Orders (TCOs) under Part XVA. This legislation was introduced to address the need for providing tariff relief for specific goods that are not produced in Australia, thereby encouraging the import of these goods. The explanatory statement accompanying Tariff Concession Instrument No. 0941087, made on 15 January 2010, illustrates the application of this scheme. Areva T&D Australia Limited applied for a TCO concerning certain transformers, and the Chief Executive Officer of Customs determined that the application met the core criteria as no substitutable goods were produced in Australia. Consequently, a TCO was issued, granting these transformers a duty-free status, reducing the general duty rate from 5% to free. This legislative measure ensures that the rights of importers are beneficially affected, allowing them to seek refunds for duties paid on these goods imported since the TCO's effective date, without imposing any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0941087 applies to the specific goods—certain transformers—that are the subject of the application made by Areva T&D Australia Limited under the Customs Act 1901. The Act allows for the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) to reduce the customs duty on particular goods if certain criteria are met. The geographic reach of this Act is national, as it falls under the Commonwealth’s authority. The application of the TCO is confined to the goods specified in the application and does not extend to other goods, industries, or entities unless explicitly covered by another TCO. The application of this particular TCO is not restricted by any specified thresholds, but it is contingent on the absence of substitutable goods produced in Australia at the time of the application. The Act provides for the possibility of subordinate instruments to further define the application of TCOs, but this particular instrument does not extend beyond its stated scope.
Key Provisions
The main operative sections of the Customs Act 1901 (the Act) related to Tariff Concession Orders (TCOs) are sections 269C, 269F, and 269S(1). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. Section 269C outlines the core criteria that a TCO application must meet, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged. Section 269S(1) specifies that a TCO is taken to have come into force on the day the application for the TCO was lodged.
Under the Act, the CEO has the obligation to decide whether an application meets the core criteria for a TCO. If the CEO is satisfied that the application meets these criteria, they must 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. Additionally, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be made to lodge a submission. The CEO is also required to consider any submissions received in response to this notice. In the case of Tariff Concession Instrument No. 0941087, the CEO was satisfied that no substitutable goods were produced in Australia, and no submissions were received opposing the TCO.
The Act imposes specific requirements on both applicants and the CEO. Applicants must ensure their goods meet the core criteria, specifically that no substitutable goods were produced in Australia on the day of application. The CEO must review the application, consider any submissions received, and decide whether to issue a TCO based on whether the core criteria are met. If a TCO is issued, the CEO must make a written order and publish the decision in the Gazette.
The Act does not explicitly detail offences, penalties, or civil/criminal consequences for breaches of the TCO provisions. However, any failure to comply with the conditions or requirements set out in the TCO itself could potentially lead to penalties under other relevant legislation. For example, if goods are imported under the TCO but do not meet the specified criteria, this could result in customs duty being payable at the general rate rather than the concessional rate, with potential for penalties for incorrect declarations or fraud. Nonetheless, the primary enforcement mechanism lies in the administrative review and decision-making process overseen by the CEO.