EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1005545
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.
Downer Edi Rail applied for a TCO in respect of certain passenger train pressure reducing valves on 01 February 2010.
Instrument
TCO No 1005545 was made on 23 April 2010. It declares that those certain passenger train pressure reducing 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. 1005545 is taken to have come into force on 01 February 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 Australian Parliament, introduced the scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs (CEO) to provide tariff concessions on certain goods. This was introduced to address the need for a mechanism that could reduce customs duties on specific goods, provided certain criteria were met. The policy objective, as outlined in the Act, is to offer relief to industries that do not have domestic production of substitutable goods, thereby encouraging import and integration into the local market without the burden of high customs duties. In the case of Tariff Concession Instrument No. 1005545, which was enacted on 23 April 2010, the legislation responded to an application by Downer Edi Rail for a TCO on certain passenger train pressure reducing valves. The CEO was satisfied that these goods qualified under the core criteria, leading to the declaration that they are subject to a zero rate of duty, down from the general rate of 5%.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the establishment of Tariff Concession Orders (TCO) by the Chief Executive Officer of Customs (CEO). The application of the Act is targeted at individuals or entities seeking to import goods that are subject to customs duties. These applications are subject to certain criteria outlined in sections 269C, 269D, 269E, and 269SJ of the Act, which dictate the conditions under which TCOs can be granted, including the non-existence of substitutable goods produced in Australia and the exclusion of specific goods from TCO consideration. The geographic and jurisdictional reach of this Act is national, as it pertains to customs practices across Australia. Any exclusions or limitations are strictly defined within the Act itself, with particular attention to the types of goods that cannot be subject to TCOs. The Act also allows for the extension or restriction of its application through subordinate instruments, such as the Regulations mentioned in the explanatory statement. The TCO in question, TCO No 1005545, pertains to certain passenger train pressure reducing valves and was made effective from the date the application was lodged, which is 1 February 2010. The TCO provides a concession by setting the duty rate to free, which contrasts with the general rate of 5% applicable to these goods.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1005545 are sections 269C, 269F, 269P(3), and 269S of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO), while section 269C outlines the criteria that must be met for such an application to be considered valid, namely that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they are required under section 269P(3) to issue a written TCO that declares the goods specified in the application to be subject to a lower rate of customs duty. Section 269S specifies that a TCO comes into force on the date the application is lodged, which in this case was 01 February 2010 for the passenger train pressure reducing valves in question.
The obligations and requirements imposed by the Act on the parties involved primarily concern the process of applying for and receiving a TCO. The CEO must ensure that any application for a TCO is considered against the core criteria, as outlined in sections 269C and 269F. If the application meets these criteria, the CEO must issue a TCO as per section 269P(3). Additionally, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions against the proposed TCO. In this instance, no submissions were received, which indicates that no objections were raised against the concession.
The Act also outlines specific consequences for breaches of its provisions, although these are not extensively detailed in the explanatory statement provided. Typically, breaches of the Customs Act 1901 may result in various penalties, which can include fines or imprisonment, depending on the severity of the offence. The maximum penalties for breaches of the Act are not specified in the explanatory statement, but they can generally be found in the relevant sections of the Act or in associated regulations. For example, under section 239 of the Customs Act, penalties for false statements or other fraudulent activities related to customs can include fines of up to $22,000 for individuals and $110,000 for corporations, in addition to potential imprisonment terms.
The Tariff Concession Instrument No. 1005545 specifically grants a tariff concession for certain passenger train pressure reducing valves, setting their customs duty rate at free, which contrasts with the general rate of 5%. This concession is effective from the date the application was lodged, 01 February 2010. The TCO does not retroactively affect any rights or impose liabilities on individuals or entities for actions taken before its registration, ensuring that only future transactions are subject to the new duty rate. Importers of these valves can apply for a refund of duty paid on imports since the TCO's effective date, enhancing the financial benefit of the concession.