EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1019749
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.
Nexus Animal Nutrition Pty Ltd applied for a TCO in respect of certain rotary heat exchangers on 30 April 2010.
Instrument
TCO No 1019749 was made on 19 July 2010. It declares that those certain rotary heat exchangers 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. 1019749 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, establishes a framework for the administration of customs and excise duties. The Act, through Part XVA, introduces a scheme for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities to secure a lower rate of customs duty on specific goods. This was introduced to address the gap in providing tariff relief for imported goods that have no Australian-made equivalents, thereby facilitating trade and economic efficiency. The policy objective, as stated, is to ensure that customs duty is only levied on imported goods for which no suitable Australian-produced substitutes exist, thus encouraging domestic production where possible while also benefiting consumers through lower prices on non-substitutable imports. The Tariff Concession Instrument No. 1019749, made on 19 July 2010, exemplifies this mechanism by granting Nexus Animal Nutrition Pty Ltd a concession on certain rotary heat exchangers, aligning with the Act’s provisions to support import relief where no local production occurs.
Scope and Application
The Tariff Concession Instrument No. 1019749 under the Customs Act 1901 applies to specific rotary heat exchangers, granting them a tariff concession that reduces the customs duty rate from the general 5% to free. This concession is available to the applicant, Nexus Animal Nutrition Pty Ltd, provided the goods are imported in compliance with the conditions stipulated in the instrument. The instrument was made on 19 July 2010, effective from 30 April 2010, the date the application was lodged. The legislation applies to any person or entity importing the specified goods into Australia, and the concession is subject to the core criteria outlined in the Customs Act 1901, specifically meeting the conditions set out in sections 269C, 269D, and 269E. The instrument does not apply to goods that are produced in Australia in the ordinary course of business, as defined by the relevant sections of the Act. The instrument’s jurisdictional reach is national, applying across all states and territories of Australia, and it does not impose any liabilities on persons other than the Commonwealth. The application process and the criteria for concessions may be further detailed through subordinate instruments, which can extend or clarify the application of the Act.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1019749, under the Customs Act 1901 (section 269F), require that an application for a Tariff Concession Order (TCO) be submitted to the Chief Executive Officer of Customs (CEO). Once the CEO has determined that the application is valid and not in respect of goods specified in section 269SJ, they must assess whether the application meets the core criteria set out in sections 269C, 269B, and 269D. Specifically, section 269C stipulates that for a TCO application to be valid, no substitutable goods must be produced in Australia in the ordinary course of business on the day the application was lodged.
The obligations imposed by this legislation on parties or entities it governs are primarily administrative. The CEO is required to evaluate each TCO application meticulously to ensure it complies with the statutory criteria. If an application meets the core criteria, the CEO must issue a written order in the form of a TCO. The CEO is also mandated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). In the case of TCO No. 1019749, the CEO did not receive any submissions.
The legislation outlines potential civil or criminal consequences for breaches. However, in this specific context, the Explanatory Statement does not detail any such offences, penalties, or consequences for breach. It does clarify that the TCO does not affect the rights of any person as at the date of registration to the detriment of that person or impose liabilities on any person in respect of anything done or omitted to be done before the date of registration. Importers, however, will be beneficially affected, as they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.