EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1013060
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.
Dux Manufacturing Ltd applied for a TCO in respect of certain heat pump parts on 15 March 2010.
Instrument
TCO No 1013060 was made on 04 June 2010. It declares that those certain heat pump 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. 1013060 is taken to have come into force on 15 March 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. 1013060, enacted in 2010, is a legislative instrument under the Customs Act 1901 designed to facilitate tariff concessions for specific imported goods. This instrument was introduced to address the need for reducing customs duties on goods for which no substitutable Australian-produced alternatives exist. The instrument was enacted by the Chief Executive Officer of Customs, in accordance with the authority granted under section 269F of the Customs Act 1901, to provide a streamlined process for tariff concessions. The primary policy objective of this instrument is to support Australian businesses by making imported goods more competitively priced, thereby encouraging the use of these goods over potentially more expensive locally produced alternatives. This approach helps to balance economic efficiency with the protection of local industries where applicable.
Scope and Application
The Tariff Concession Instrument No. 1013060, made under the Customs Act 1901, applies to goods that are the subject of a Tariff Concession Order (TCO). Specifically, this instrument applies to certain heat pump parts for which Dux Manufacturing Ltd applied for a concession on 15 March 2010. The Act facilitates the application process for TCOs, which are subject to certain criteria including the absence of substitutable goods produced in Australia at the time of the application. The Chief Executive Officer of Customs must determine whether the application meets these core criteria before issuing a TCO. The instrument declares that the specified heat pump parts are subject to a duty-free status as per item 50 of Schedule 4 to the Customs Tariff Act 1995. This TCO, effective from 15 March 2010, does not affect any existing rights or liabilities of persons other than the Commonwealth, thereby ensuring that the rights of importers are positively impacted by allowing them to apply for a refund of duty on imports made since the TCO's effective date.
Key Provisions
The Tariff Concession Order (TCO) No. 1013060, made under section 269F of the Customs Act 1901, provides a concessional rate of customs duty for certain heat pump parts (section 269P(3)). Specifically, the CEO of Customs, satisfied that no substitutable goods were produced in Australia on the date the application was lodged, declared that these goods are subject to a zero rate of duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995 (section 269C). This means that instead of the general rate of duty of 5%, the goods in question now attract no customs duty at all.
The obligations imposed on entities by this TCO include ensuring that any goods imported after the effective date of 15 March 2010 are eligible for the zero-duty rate if they meet the specified criteria of the TCO. Importers must ensure that the goods in question are indeed the specified heat pump parts and that they have not been produced in Australia at the time of application. The TCO also requires the CEO to publish a notice in the Gazette inviting submissions on the application, which was done without any objections being received (subsection 269K(1)).
Failure to comply with the terms of this TCO could result in a breach of the Customs Act 1901. Specifically, if goods are imported that do not meet the criteria for the tariff concession, or if false information is provided in the application, this could be considered a violation. Penalties for such breaches could include financial penalties as stipulated in the relevant sections of the Customs Act. While the exact penalties are not detailed in the explanatory statement, they typically include fines that can be substantial depending on the severity and intent of the breach. Additionally, there could be criminal consequences for deliberate misrepresentation or fraud in the application process.