EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1025760
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.
Airefrig Australia Pty Ltd applied for a TCO in respect of certain pipe ducting on 08 June 2010.
Instrument
TCO No 1025760 was made on 30 August 2010. It declares that those certain pipe ducting 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. 1025760 is taken to have come into force on 08 June 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, provides a framework for the imposition and collection of customs duty, including provisions for tariff concession orders (TCOs). These orders allow for the reduction or exemption of customs duty on certain goods, provided specific criteria are met. The primary problem or gap this legislation addresses is the potential economic disadvantage faced by Australian businesses when competing with imported goods that are subject to higher tariffs, by facilitating tariff concessions for goods that are not produced domestically or are substitutable by imported goods. The explanatory statement for Tariff Concession Instrument No. 1025760, made under the Customs Act 1901, clarifies the application process and criteria for a TCO, detailing how the Chief Executive Officer of Customs evaluates applications and the circumstances under which a TCO may be granted. This legislative instrument was introduced to ensure that the tariff concessions are applied fairly and transparently, with a clear policy objective to support Australian businesses by reducing the cost of imported goods that have no domestic alternatives.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) which apply a lower rate of customs duty to specified goods, thereby providing tariff relief. These TCOs are administered by the Chief Executive Officer of Customs (CEO) who evaluates applications against core criteria, such as whether substitutable goods are produced in Australia in the ordinary course of business. The Act specifies that the application process includes public notification to allow for objections, although in this instance, no submissions were received. The TCO, once made, applies retroactively to the date of the application and benefits importers by potentially allowing them to claim a refund of duty on goods imported since that date. Importantly, TCOs do not disadvantage existing rights or impose new liabilities on persons other than the Commonwealth. The scope of this legislation extends to all entities involved in the importation of goods that meet the criteria for a TCO, thereby impacting the customs duty paid on such goods. This particular TCO applies nationally across Australia, affecting all importers and the customs process for the specified goods.
Key Provisions
The Customs Act 1901, as amended, facilitates the application and granting of Tariff Concession Orders (TCOs) through Section 269F, which allows a person to apply for a TCO in respect of goods. Once an application is made, the Chief Executive Officer of Customs (CEO) assesses whether the application meets the core criteria specified in Section 269C. This involves determining that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied with the application, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. For example, in TCO No 1025760 made on 30 August 2010, certain pipe ducting was declared as subject to a zero percent duty rate under item 50 of Schedule 4 to the Tariff.
The Act imposes specific obligations on the CEO regarding the processing of TCO applications. Under Section 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. Additionally, Section 269P(3) mandates that if the CEO is satisfied that an application meets the core criteria, they must make a written order. For instance, TCO No 1025760 was made after the CEO was satisfied that no substitutable goods were produced in Australia for certain pipe ducting.
There are no direct offences, penalties, or civil or criminal consequences specified in the Customs Act 1901 or in the TCO No 1025760 for breaching the terms of a TCO. However, the Act ensures that the TCO does not affect the rights of a person as at the date of registration so as to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration. The rights of importers are 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. This mechanism is designed to provide tariff relief without retroactive liability or disadvantage to existing parties.