EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1034333
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.
Icon Valve Group applied for a TCO in respect of certain sampling valves on 27 July 2010.
Instrument
TCO No 1034333 was made on 25 October 2010. It declares that those certain sampling 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. 1034333 is taken to have come into force on 27 July 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 Commonwealth Parliament and addresses the need for a systematic approach to customs duties and tariff concessions. This Act facilitates the establishment of Tariff Concession Orders (TCOs) which can apply reduced customs duty rates to specific goods under certain conditions. The Tariff Concession Instrument No. 1034333, introduced in 2010, provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions when it is determined that no substitutable goods are produced in Australia. The policy objective of this legislative instrument is to encourage the importation of goods that are not domestically produced, thereby potentially benefiting consumers and industries reliant on such imports. The explanatory statement highlights that this specific TCO, concerning certain sampling valves, was granted following an application by Icon Valve Group, and the concession was effective from the date the application was lodged, with no submissions opposing the concession being received.
Scope and Application
The Tariff Concession Instrument No. 1034333 under the Customs Act 1901 applies to goods, specifically certain sampling valves, for which Icon Valve Group applied on 27 July 2010. The Act provides a framework for the Chief Executive Officer (CEO) of Customs to grant Tariff Concession Orders (TCOs) that reduce the rate of customs duty on specific goods. This instrument is relevant to industries importing or dealing in the specified sampling valves, as it directly impacts the customs duty applicable to these goods. The geographic reach of this legislation is national, as it operates under the Commonwealth’s authority. The application process involves assessing whether the goods in question are substitutable by Australian-produced goods, and if no such goods exist, the CEO can issue a TCO. The Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ of the Act. This particular TCO was effective from the date of application, 27 July 2010, without imposing any liabilities or affecting pre-existing rights adversely. Importers stand to benefit from this concession by potentially applying for duty refunds on imports of the specified valves from the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) sets forth a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (the CEO). Specifically, Part XVA of the Act governs the process and criteria for such orders. A TCO allows for a reduced rate of customs duty on specified goods (section 269F). An application for a TCO can be made by any person, and if the CEO determines that the application pertains to goods not listed in section 269SJ (goods ineligible for a TCO), the CEO must assess whether the application meets the core criteria outlined in section 269C. For a TCO to be considered, the application must demonstrate that, on the date it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively.
The obligations imposed by the Act on the parties involved are quite clear. For the CEO, the key responsibility is to determine if an application for a TCO meets the core criteria set out in section 269C. This involves verifying that no substitutable goods were produced in Australia on the application date. If the CEO finds that the application meets these criteria, they are required to issue a written TCO specifying the goods and the applicable tariff item from the Customs Tariff Act 1995 (Tariff). For applicants, the obligation is to provide sufficient evidence and information to support their claim that no substitutable goods were produced in Australia, thereby meeting the core criteria.
Should any party fail to comply with the obligations set forth in the Act, there could be civil or criminal consequences. While the specific penalties are not detailed in the explanatory statement, breaches of customs regulations generally carry significant fines and potential imprisonment under the Customs Act. For example, knowingly making a false statement in an application could lead to penalties such as fines up to $22,200 for individuals or significantly higher for corporations, as well as imprisonment terms which can vary based on the severity and intent of the offence. The Act, therefore, imposes stringent compliance requirements and serious penalties for non-compliance to ensure the integrity of the tariff concession scheme.