EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941603
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 flame detectors on 4 November 2009.
Instrument
TCO No 0941603 was made on 15 January 2010. It declares that those certain flame detectors 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 10%. 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. 0941603 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 to provide for the administration of the Australian Customs system, including the imposition of customs duty and the regulation of the importation and exportation of goods. The Tariff Concession Instrument No. 0941603 was introduced to address a specific gap in the legislation by allowing for the concession of customs duty on certain goods under particular circumstances. This instrument was made under the authority of the Customs Act 1901 by the Chief Executive Officer of Customs, pursuant to section 269F. The primary objective of this instrument is to ensure that a lower rate of customs duty applies to goods that meet the core criteria, which include the absence of substitutable goods produced in Australia in the ordinary course of business. The instrument was published in the Gazette, inviting any interested parties to submit objections, though none were received in this instance. The tariff concession for the flame detectors in question came into effect on the date the application was lodged, providing a benefit to importers by allowing them to apply for a refund of duty on goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0941603, established under the Customs Act 1901, applies to goods specified in the Instrument and is directed towards entities or individuals importing these goods into Australia. This legislation pertains specifically to the granting of tariff concessions on certain flame detectors, as applied for by Rio Tinto Aluminium Limited, and is applicable across the Commonwealth of Australia. The Instrument was enacted to ensure that these particular flame detectors, which are not produced in Australia and for which no substitutable domestic goods exist, receive a concessional tariff rate. This process ensures that the goods are taxed at a rate of zero percent, in contrast to the general rate of ten percent. The scope of the Act is extended through subordinate instruments which define terms such as 'substitutable goods' and 'ordinary course of business', ensuring clarity and consistency in application. The Act excludes any goods specified in section 269SJ of the Customs Act 1901 and does not impose any new liabilities or disadvantage existing rights as of the date of the Instrument's registration.
Key Provisions
The Customs Act 1901, under Part XVA, allows for Tariff Concession Orders (TCOs) to be issued by the Chief Executive Officer (CEO) of Customs. These TCOs provide a lower rate of customs duty on goods specified in the order. Section 269F allows any person to apply to the CEO for a TCO in respect of goods. If the CEO determines that the application does not pertain to goods specified in section 269SJ, which lists goods that cannot be subject to a TCO, the CEO must then decide if the application meets the core criteria outlined in section 269C. Specifically, section 269C stipulates that an application meets the core criteria if, on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business.
Section 269B further defines key terms used in the Act, such as "goods produced in Australia", "ordinary course of business", and "substitutable goods". For the purposes of a TCO application, "substitutable goods" refers to goods produced in Australia that can be put to a use corresponding with the goods in question. If the CEO is satisfied that the application meets the core criteria, subsection 269P(3) mandates that the CEO issue a written order (a TCO) stating that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with the duty rate specified in the order. In the case of TCO No. 0941603, the CEO issued this order for certain flame detectors on 15 January 2010, setting the duty rate at free, as the CEO was satisfied that no substitutable goods were produced in Australia.
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for the CEO to consider applications for TCOs and make decisions based on the core criteria set out in section 269C. Once a valid application is received, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be made to lodge a submission. In the case of TCO No. 0941603, the CEO did not receive any submissions. The TCO is deemed to have come into force on the day the application was lodged, which, for TCO No. 0941603, is 4 November 2009.
Any breach of the provisions of the Customs Act 1901 may result in both civil and criminal consequences. The Act does not specify particular offences or penalties for breaches related to TCOs, but general provisions of the Act may apply, including potential fines and imprisonment for breaches. Additionally, any person who benefits from a TCO without complying with the terms of the order may face penalties, including the repayment of any duty benefits received. Importers who have imported goods since the TCO came into force can apply for a refund of duty under paragraph 126(1)(r) of the Regulations.