EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1019725
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.
BOC Limited applied for a TCO in respect of certain insulated gate bipolar transistor frequency parts on 30 April 2010.
Instrument
TCO No 1019725 was made on 19 July 2010. It declares that those certain insulated gate bipolar transistor frequency 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. 1019725 is taken to have come into force on 30 April 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, provides a framework for the regulation of imports and exports, including the imposition of customs duties. One of the mechanisms within this framework is the Tariff Concession Order (TCO), which can reduce the duty on certain goods under specific circumstances. The explanatory statement for Tariff Concession Instrument No. 1019725 outlines the process and criteria for making such orders, as well as the specific case of BOC Limited’s application for a TCO concerning insulated gate bipolar transistor frequency parts. The purpose of this instrument is to provide tariff concessions where appropriate, ensuring that the application of lower duty rates is consistent with the policy objectives of the Customs Act, such as promoting fair trade practices and supporting domestic industries by preventing the displacement of Australian production. The instrument was introduced to address the need for a streamlined process to grant tariff concessions when it is determined that no substitutable goods are produced in Australia.
Scope and Application
The Customs Act 1901, as amended, provides the framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply a lower rate of customs duty on certain goods. The Act applies to any person or entity seeking to import goods eligible for tariff concessions, provided that the goods are not listed in section 269SJ as ineligible. The scope of the Act extends nationally, as it is a Commonwealth Act, and its provisions are applicable across Australia. The application process for a TCO requires the applicant to meet the core criteria specified in section 269C, which includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The Act allows for the CEO to make a written order if these criteria are met, as was the case in TCO No. 1019725 concerning certain insulated gate bipolar transistor frequency parts. This specific TCO came into effect on the date the application was lodged, 30 April 2010, and does not retroactively affect the rights of any person or impose any liabilities on them. Importers of the affected goods can apply for a refund of duties paid since the effective date of the TCO. The application of the Act can be further refined through subordinate instruments, which may detail specific procedures or additional criteria for TCO applications.
Key Provisions
The main operative sections of this legislation revolve around the process and requirements for making a Tariff Concession Order (TCO) under the Customs Act 1901 (the Act). Section 269F allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of specific goods. Section 269C outlines the core criteria that must be satisfied for an application to be considered valid, which includes ensuring that no substitutable goods are produced in Australia on the day the application was lodged (section 269P(3)). If the CEO is satisfied that the application meets the core criteria, they are required to issue a TCO, as stipulated in section 269P(3). The instrument, TCO No. 1019725, declares that certain insulated gate bipolar transistor frequency parts are subject to a lower rate of customs duty, specifically item 50 of Schedule 4 to the Customs Tariff Act 1995, with a general rate of duty of 5% reduced to free.
The obligations imposed by the Act primarily involve the CEO, who is tasked with assessing TCO applications to determine whether they meet the core criteria. The CEO must also publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. In this case, no submissions were received. Additionally, the Act requires that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on anyone for actions taken prior to the registration of the TCO. Importers, however, benefit from the rights to apply for a refund of duty on goods imported since the effective date of the TCO.
There are no explicit offences or penalties outlined in the explanatory statement for breaches of the provisions related to TCOs under the Customs Act 1901. However, it is understood that failure to comply with the requirements of the Act, including the process for applying for and issuing TCOs, could lead to legal consequences. Typically, such breaches might result in fines or other penalties as prescribed under relevant sections of the Act or other applicable legislation. The specifics of any penalties would need to be referred to in the primary legislation or associated regulations, which are not detailed in this explanatory statement.