EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0943670
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.
Hurll Nu Way applied for a TCO in respect of certain hot water boilers on 19 November 2009.
Instrument
TCO No 0943670 was made on 5 February 2010. It declares that those certain hot water boilers 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. 0943670 is taken to have come into force on 19 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 amended to include the scheme for Tariff Concession Orders (TCOs) in Part XVA, which was enacted to address the need for specific tariff reductions on certain imported goods where no substitutable goods are produced in Australia. This scheme enables the Chief Executive Officer of Customs to reduce the customs duty on goods specified in a TCO application, provided certain criteria are met. The policy objective is to encourage the importation of goods that are not produced domestically, thereby potentially lowering costs for consumers and businesses that rely on these imports. The Explanatory Statement outlines the process for applying for a TCO and the conditions under which these concessions are granted, such as the requirement that no substitutable goods are produced in Australia in the ordinary course of business. The Tariff Concession Instrument No. 0943670, made in 2010, is an example of this process, where a TCO was granted for certain hot water boilers, resulting in a reduction of the duty rate from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 0943670, made under Part XVA of the Customs Act 1901, applies to the specific hot water boilers for which Hurll Nu Way made an application on 19 November 2009. The instrument was enacted to provide tariff concessions for these goods, resulting in a free rate of duty instead of the general rate of 5%. The instrument operates on a national level, as it pertains to the Commonwealth's customs regulations and duties. It does not affect any rights of persons other than the Commonwealth and does not impose any liabilities on any person. The instrument came into force on the date of application, 19 November 2009, and it does not include any exclusions or exemptions beyond those specified in the Customs Act 1901 and the Customs Tariff Act 1995. The application process, including the requirement for the Chief Executive Officer of Customs to be satisfied that no substitutable goods were produced in Australia, ensures that the concessions are granted under specific and limited circumstances.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0943670, pursuant to the Customs Act 1901, declare that certain hot water boilers will be exempt from a 5% customs duty, instead being subject to a zero rate of duty. Section 269P(3) requires the Chief Executive Officer of Customs (CEO) to issue a written order, or Tariff Concession Order (TCO), once satisfied that the application for the concession meets the core criteria set out in section 269C and 269B. This particular TCO, No. 0943670, was made on 5 February 2010, following an application by Hurll Nu Way on 19 November 2009. The instrument specifies that these boilers are now subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, which imposes a zero duty rate on the goods.
The obligations imposed by this Act on the parties or entities it governs primarily concern the CEO's role in assessing and approving TCO applications. As per section 269F, the CEO must ensure that the application is not for goods specified in section 269SJ, which lists goods that cannot be subject to a TCO. Once an application is deemed valid, the CEO must determine if it meets the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged, as outlined in section 269C. Additionally, section 269K(1) mandates that the CEO publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO. In this case, no submissions were received in response to the published notice.
In terms of offences, penalties, or consequences for breach, the Customs Act 1901 does not specify explicit penalties for non-compliance with the TCO provisions. However, it is implied that failure to adhere to the terms of a TCO could result in legal repercussions. The TCO itself states that it 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. This means that while the TCO provides tariff concessions, it does not impose new liabilities on individuals or entities. Importers, under paragraph 126(1)(r) of the Regulations, can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force.
The overall framework provided by the Customs Act 1901 ensures that tariff concessions are granted in a transparent and fair manner, while also protecting the interests of all parties involved. The obligations on the CEO are clear and the process for applying for and granting TCOs is detailed, ensuring that the system operates efficiently and effectively.