EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1004434
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.
Caltex Refineries Pty Ltd applied for a TCO in respect of certain heat exchanger parts on 22 January 2010.
Instrument
TCO No 1004434 was made on 09 April 2010. It declares that those certain heat exchanger 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. 1004434 is taken to have come into force on 22 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 Tariff Concession Instrument No. 1004434 was enacted under the Customs Act 1901 to address the issue of tariff concessions for specific goods, in this instance, certain heat exchanger parts. The Customs Act 1901 provides a framework through which Tariff Concession Orders (TCOs) can be made, allowing for a lower rate of customs duty on goods specified in such orders. Enacted by the Chief Executive Officer of Customs, the instrument aims to ensure that the application for a tariff concession aligns with the core criteria stipulated in the Act, specifically addressing the production and substitution of goods within Australia. The policy objective is to facilitate trade by reducing the customs duty burden on certain goods, thereby encouraging their importation and use in Australia without imposing undue liability on entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 1004434, applies to entities and individuals who import goods into Australia and seek a reduction in customs duty for specific items not produced domestically. This legislation enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the customs duty rate for certain goods if no substitutable goods are produced in Australia. This Act operates at a national level, as it is an instrument of the Commonwealth of Australia, and applies across all states and territories. Notably, the Act excludes any goods specified in section 269SJ from being subject to a TCO, which includes certain restricted or sensitive goods. The instrument in question, TCO No. 1004434, was applied to certain heat exchanger parts, granted by the CEO after determining that no suitable Australian-made substitutes existed, thereby setting the duty rate for these specific parts to free. The application of this instrument does not affect existing rights or impose new liabilities on persons other than the Commonwealth.
Key Provisions
The key operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269F, and 269P. Section 269F (1) allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO for goods, while section 269C (1) outlines the core criteria that must be met for the CEO to consider making a TCO. Section 269P (3) specifies that if the CEO is satisfied that the application meets the core criteria, they must make a written order (the TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Customs Act 1901 imposes several obligations on the parties involved with TCOs. The CEO must assess whether an application meets the core criteria, including ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (section 269K). If no submissions are received, the CEO can proceed to make the TCO.
Breaching the provisions of the Customs Act 1901 can lead to various consequences. While the explanatory statement does not explicitly list offences or penalties, the general principle is that non-compliance with customs regulations can result in civil or criminal penalties. For instance, importing goods without paying the correct duty could lead to fines or imprisonment, depending on the severity and intent of the breach. The maximum penalties for customs offences can vary but often include substantial fines and, in severe cases, imprisonment.
It is essential to note that the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken before the TCO was made. Importers of goods affected by the TCO can apply for a refund of duty paid on those goods since the TCO's effective date (Regulation 126(1)(r)). This provision ensures that the rights of importers are protected and that they benefit from the tariff concessions granted by the TCO.
The TCO also ensures that no new liabilities are imposed on any person as a result of its implementation. This aspect is particularly important for businesses and individuals who may otherwise face unexpected financial burdens if new regulations were to retroactively affect their past transactions. By clearly defining the scope and impact of the TCO, the Act aims to provide clarity and stability in the application of customs duties, thereby fostering a fair and predictable trading environment.