EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014829
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.
Fluid Products applied for a TCO in respect of certain ball valves on 26 March 2010.
Instrument
TCO No 1014829 was made on 18 June 2010. It declares that those certain ball 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. 1014829 is taken to have come into force on 26 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 Customs Act 1901, enacted by the Parliament of Australia, established a framework for the imposition of tariffs and duties on goods imported into Australia. To address the issue of ensuring fair trade practices and providing economic incentives for businesses, the Act introduced the mechanism for Tariff Concession Orders (TCOs) under Part XVA. These orders allow for the reduction or exemption of customs duty on certain goods, provided specific criteria are met, such as the absence of substitutable goods produced domestically. The instrument F2010L02700, also known as Tariff Concession Instrument No. 1014829, was enacted to provide tariff concessions for specific ball valves, following an application by Fluid Products on 26 March 2010. The order, which came into force on the same day, was made on 18 June 2010, after it was determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria set out in the Act. This concession reduces the duty on these ball valves from 5% to free, benefiting importers by potentially allowing them to claim refunds for duties paid on imports before the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This mechanism allows for a reduced rate of customs duty on goods subject to a TCO, provided the application meets the core criteria outlined in the Act. The application process involves ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO determines that the application complies with these criteria, a TCO is issued, granting tariff concessions for the specified goods. The instrument applies to individuals or entities seeking tariff concessions for specific goods, provided these goods are not excluded under section 269SJ of the Act. Geographically, the application of this Act is national, administered under the Commonwealth’s purview. Any exclusions or exemptions are strictly defined within the Act itself, and the scope of application can be further refined through subordinate instruments. For instance, the explanatory statement notes that Fluid Products successfully applied for a TCO for certain ball valves, resulting in a concession from the general duty rate of 5% to free duty, effective from the date of application submission, 26 March 2010.
Key Provisions
The main operative sections of this legislation pertain to the application and creation of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. The CEO must consider whether the application meets the core criteria outlined in section 269C, which includes ensuring that no substitutable goods are produced in Australia on the day the application is lodged. If the application meets these criteria, the CEO must make a TCO as per section 269P(3), which specifies the rate of customs duty for the goods in question.
The Act imposes certain obligations and requirements on the parties involved. The CEO is required to publish a notice in the Gazette when an application for a TCO is accepted as valid, inviting any person to lodge a submission if they believe the TCO should not be made. This is outlined in subsection 269K(1) of the Act. Additionally, the CEO must ensure that the application meets the core criteria before making a TCO, which includes verifying that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E.
Breach of the provisions set out in the Act can lead to various consequences. While the Act does not explicitly state offences or penalties for failing to comply with the TCO requirements, non-compliance with customs regulations generally can result in civil or criminal penalties. For example, under section 244 of the Customs Act 1901, an offence of knowingly or recklessly making a false or misleading statement can lead to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. Additionally, section 244A imposes penalties for attempting to influence a public official, which can also lead to significant fines and imprisonment. The Act ensures that the rights of persons other than the Commonwealth are protected and that no new liabilities are imposed on them by the TCO.