EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1002790
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.
Reliance Worldwide Pty Ltd applied for a TCO in respect of certain jumper valve parts on 14 January 2010.
Instrument
TCO No 1002790 was made on 09 April 2010. It declares that those certain jumper valve parts 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. 1002790 is taken to have come into force on 14 January 2010.
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 Parliament of Australia, provides a framework for the regulation of customs and excise duties. It establishes a mechanism for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs), which offer lower customs duty rates for specified goods. This mechanism addresses the gap where certain goods, particularly those not produced domestically, could benefit from reduced customs duties, thus making them more competitive and accessible. The Tariff Concession Instrument No. 1002790, which came into force on 14 January 2010, was introduced to provide a concession for specific jumper valve parts, recognising that no substitutable goods were produced in Australia at the time of the application. The policy objective is to facilitate trade by reducing the cost burden on importers of these specific goods, thereby potentially stimulating economic activity and encouraging the import of goods that are not domestically produced.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, applicable to specific goods. These orders can significantly reduce or eliminate customs duty on particular goods, provided the goods are not excluded under section 269SJ and meet the core criteria outlined in section 269C. Specifically, a TCO can be granted if no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. This process was followed when Reliance Worldwide Pty Ltd applied for a TCO for certain jumper valve parts, leading to Tariff Concession Order No. 1002790, which was registered on 9 April 2010. This order effectively made the duty on these specific parts free, down from the general rate of 5%, and came into effect on the date the application was lodged, 14 January 2010. The TCO does not impact existing rights or impose new liabilities on any party except the Commonwealth and provides an opportunity for importers to claim duty refunds for goods imported since the TCO’s effective date.
Key Provisions
The key provisions of this Tariff Concession Order (TCO) revolve around the application process and the conditions under which a TCO can be granted (sections 269F, 269C, 269B, and 269P(3)). A person can apply for a TCO if the goods in question are not specified in section 269SJ of the Customs Act 1901, and if no substitutable goods are produced in Australia in the ordinary course of business. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these core criteria, they must make a written order declaring the goods subject to a prescribed rate of duty specified in Schedule 4 to the Customs Tariff Act 1995. In this case, the TCO No. 1002790 was made on 09 April 2010, declaring that certain jumper valve parts are subject to a rate of duty of free, as the CEO was satisfied that no substitutable goods were produced in Australia.
The obligations and requirements imposed by the Act on the parties involved primarily concern the process of applying for and receiving a TCO. The applicant must ensure that their application complies with the criteria outlined in sections 269C and 269B of the Act. The CEO must then evaluate the application and determine if it meets the core criteria before making a decision. Additionally, the CEO has an obligation under section 269K(1) to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In this instance, the CEO did not receive any submissions in response to the invitation. The TCO itself does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person.
The legislation also outlines potential consequences for breaches of the Act. However, the Explanatory Statement does not detail specific offences or penalties associated with breaching the Act or the TCO. Typically, breaches of the Customs Act 1901 can result in substantial penalties, both civil and criminal, including fines and imprisonment, depending on the nature and severity of the offence. The maximum penalties for customs-related offences can vary significantly, often based on the value of the goods involved and whether the breach was intentional or negligent. For example, under section 237 of the Customs Act 1901, a person can be fined up to $22,000 or imprisoned for up to two years, or both, for a serious customs offence. It is important to note that the specific penalties for breaches of a TCO would depend on the terms of the order and the relevant provisions of the Customs Act 1901.