EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941410
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.
AVK Australia Pty Ltd applied for a TCO in respect of certain bypass gate valves on 4 November 2009.
Instrument
TCO No 0941410 was made on 5 March 2010. It declares that those certain bypass gate 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. 0941410 is taken to have come into force on 4 November 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 a regulatory framework for the administration of customs duties and related matters. One of the mechanisms introduced under this Act is the Tariff Concession Order (TCO), which allows for the reduction of customs duties on certain imported goods. The Tariff Concession Instrument No. 0941410, made under this Act, addresses the specific issue of applying a concessional tariff rate to certain bypass gate valves, following an application by AVK Australia Pty Ltd. This legislative instrument was introduced to provide a tariff concession where it was determined that no substitutable goods were produced in Australia, thereby meeting the core criteria outlined in the Customs Act. The policy objective of this measure is to facilitate the import of goods that are not domestically produced, thereby supporting industries that rely on imported components.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0941410, pertains to the process by which the Chief Executive Officer of Customs can grant tariff concessions on specific goods. This legislation applies to entities or individuals who seek tariff concessions for goods that are not already excluded by section 269SJ of the Act, and which do not have substitutable goods produced in Australia. The application must meet the core criteria stipulated in section 269C, where no substitutable goods are produced domestically in the ordinary course of business. The geographic reach of this Act is national, as it applies across Australia under the Commonwealth’s customs regulations. The instrument itself does not specify any exclusions apart from those already mentioned in the Act. The application of the Act can be further refined or extended through subordinate instruments, which might provide additional guidelines or criteria for specific types of goods or industries.
Key Provisions
The key provisions of Tariff Concession Instrument No. 0941410 under the Customs Act 1901 revolve around the application and implementation of Tariff Concession Orders (TCOs) for specific goods, namely certain bypass gate valves. Section 269F of the Act allows for the application of a TCO by any individual or entity, which must be assessed by the Chief Executive Officer of Customs (CEO) to ensure it does not pertain to goods specified in section 269SJ that cannot be subject to a TCO. The CEO's decision hinges on whether the application meets the core criteria outlined in section 269C. If no substitutable goods, as defined in section 269D, are produced in Australia in the ordinary course of business, the application is deemed to meet these criteria, thereby allowing the CEO to proceed with issuing a TCO.
Section 269P(3) of the Act mandates that upon the CEO's satisfaction that the application meets the core criteria, a written order (TCO) must be made. This TCO declares that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively applying a lower rate of duty or making it duty-free. For the bypass gate valves in question, the TCO resulted in a general rate of duty of 5% being reduced to free duty.
Entities and individuals governed by this Act must adhere to the outlined process for applying for a TCO and the criteria for its approval. They must ensure that their applications are valid and that the goods in question do not have substitutable equivalents produced in Australia. The CEO is required to publish notices in the Gazette inviting submissions from any interested parties who may oppose the TCO. Any such submissions must be considered before a final decision is made.
Failure to comply with the provisions of the Act, including providing false information in an application or attempting to circumvent the TCO process, may result in civil or criminal penalties. The specific penalties are not detailed in the explanatory statement, but typically, breaches of the Customs Act 1901 can lead to significant fines and potential imprisonment depending on the severity of the breach. The Act provides for enforcement actions by the CEO to ensure compliance, including the imposition of penalties and the revocation of any TCOs that were improperly granted.