EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1041369
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.
Origin Energy Resources Ltd applied for a TCO in respect of ball valves on 3 September 2010.
Instrument
TCO No 1041369 was made on 15 November 2010. It declares that those certain ball 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. 1041369 is taken to have come into force on 3 September 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 Australian Parliament to regulate and manage customs duties and related matters. The Act provides the framework for the administration of customs, including the imposition of duties and the grant of tariff concessions. Specifically, Part XVA of the Act outlines a scheme for Tariff Concession Orders (TCOs), which may be made by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty to certain goods. The Tariff Concession Instrument No. 1041369, made on 15 November 2010, grants a tariff concession to Origin Energy Resources Ltd for ball valves, allowing for their importation duty-free, thereby addressing the gap in the availability of competitively priced valves in Australia by facilitating their importation. The policy objective of this legislation is to ensure that essential goods that cannot be produced domestically are accessible at reduced costs, thus supporting economic efficiency and consumer benefits without imposing any liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders are designed to apply a reduced rate of customs duty to goods that meet certain criteria, provided the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The process involves an application to the CEO, who then assesses whether the application meets the core criteria set out in sections 269C, 269D, and 269E of the Act. If the application is approved, the CEO issues a TCO that specifies the applicable rate of duty from the Customs Tariff Act 1995. The TCO applies to the goods from the date the application was lodged and does not disadvantage any person by affecting their rights as at the date of registration or imposing liabilities for actions taken prior to the registration of the TCO.
The geographic and jurisdictional reach of the Act is national, given its enactment under the Commonwealth. The Act applies to any entity or person seeking tariff concessions for specific goods, and the application process is open to the public, with an opportunity for submissions as outlined in section 269K(1) of the Act. The scope of the legislation is further extended through subordinate instruments, which may include regulations or further guidelines issued by the CEO to facilitate the implementation and administration of the tariff concession scheme.
Key Provisions
The Customs Act 1901, under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs (CEO), which can significantly reduce customs duties on specific goods. Section 269F allows individuals or entities to apply for a TCO concerning goods, provided they do not fall under the exceptions listed in section 269SJ. For an application to be considered, it must meet the core criteria as outlined in section 269C, specifically, there must be no substitutable goods produced in Australia on the day the application is lodged. 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 parties or entities governed by it include ensuring that any application for a TCO strictly adheres to the specified criteria. The CEO is obligated to review the application and make a decision based on whether the core criteria are met. Additionally, the CEO must publish a notice in the Gazette inviting any interested party to submit objections or submissions regarding the proposed TCO, as required by subsection 269K(1). In the case of TCO No. 1041369, the CEO did not receive any submissions and thus proceeded to grant the concession.
The Act does not explicitly outline specific offences or penalties for breaches related to TCO applications; however, any failure to comply with the requirements or obligations outlined could potentially lead to disputes or challenges in court. The consequences of non-compliance might include invalidating the TCO, leading to the imposition of full customs duties on the goods in question. While the Act does not detail maximum penalties, the general principles of administrative law and the specific provisions of the Customs Act may apply in such cases.