EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1023592
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.
Exact Energy Australia Pty Ltd applied for a TCO in respect of certain voltage power optimisers on 27 May 2010.
Instrument
TCO No 1023592 was made on 23 August 2010. It declares that those certain voltage power optimisers 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. 1023592 is taken to have come into force on 27 May 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 was enacted by the Parliament of Australia to facilitate the administration of customs duties and the regulation of imported goods. The Act was introduced to address the need for a structured system to manage customs duties and related activities. One of its provisions under Part XVA allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce customs duty on certain imported goods if specific criteria are met. The problem or gap addressed by this legislation includes the need to provide tariff concessions for goods that do not have substitutable products produced domestically, thereby encouraging the importation of certain goods and potentially fostering economic activity. The policy objective, as stated in the Act, is to ensure that a TCO application is only approved if no substitutable goods are produced in Australia, thus supporting industries that rely on imported components.
Scope and Application
The Customs Act 1901, as amended, allows for the establishment of Tariff Concession Orders (TCO) under its section 269F, which enables a lower rate of customs duty on specified goods. This process is initiated when an application is made to the Chief Executive Officer of Customs (CEO) by a person or entity. The scope of the Act includes any individual or business entity that imports goods and seeks to benefit from reduced customs duty rates through a TCO. The Act applies nationally across Australia, administered by the Commonwealth, and pertains specifically to goods that are subject to the Customs Tariff Act 1995. However, it excludes certain goods as specified in section 269SJ, which are not eligible for tariff concessions. The Act also includes provisions for subordinate instruments that can further extend or restrict the application of the TCO. The instrument in question, TCO No. 1023592, specifically applies to certain voltage power optimisers, granting them a free duty rate as of 27 May 2010, the date the application was lodged.
Key Provisions
The key operative sections of this legislation are sections 269C, 269P, and 269S. Section 269C of the Customs Act 1901 outlines the criteria that must be met for an application for a Tariff Concession Order (TCO) to be considered valid, specifically, that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). Section 269P requires that if the Chief Executive Officer of Customs (CEO) is satisfied that an application meets the core criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (s 269P(3)). Section 269S sets out that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged (s 269S(1)).
The obligations imposed by the Act on parties include the requirement for an applicant to ensure their TCO application meets the core criteria, as outlined in section 269C, which involves demonstrating that no substitutable goods were produced in Australia on the day of application. The CEO is required to publish a notice in the Gazette inviting submissions from any interested parties once an application is accepted as valid (s 269K(1)). Additionally, the CEO must decide whether to make a TCO if the application meets the core criteria (s 269P(3)). The Act also mandates that the TCO does not affect the rights of a person, other than the Commonwealth, in a way that disadvantages them or imposes liabilities in respect of actions taken before the TCO's registration (s 269S(2)).
In terms of penalties, the Customs Act 1901 does not explicitly state penalties for breaches related to TCO applications. However, breaches of other provisions within the Customs Act may incur civil or criminal penalties. For instance, section 236A of the Customs Act prescribes that any person who wilfully makes a false statement or representation in a document related to customs matters is liable to a penalty of up to 10,000 penalty units or imprisonment for five years, or both. Similarly, section 237 imposes penalties for knowingly or recklessly providing false information or making false statements in connection with customs matters, with penalties of up to 10,000 penalty units or imprisonment for five years, or both. These provisions underscore the importance of accuracy and truthfulness in dealings with customs matters.