EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043104
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.
AVFI Pty Ltd applied for a TCO in respect of certain gate valves on 20 September 2010.
Instrument
TCO No 1043104 was made on 9 March 2011. It declares that those certain gate 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. 1043104 is taken to have come into force on 20 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 Parliament of Australia to provide for the administration of customs and excise duties and to regulate the importation and exportation of goods. The Act was designed to address the need for a structured approach to managing customs duties and facilitating trade. One of the mechanisms introduced under Part XVA of the Act is the Tariff Concession Order (TCO), which allows the Chief Executive Officer of Customs to reduce customs duty on certain imported goods. This mechanism was introduced to support Australian industries by reducing the cost of imported goods that do not have domestic alternatives. The policy objective is to ensure that Australian consumers and businesses have access to a broader range of competitively priced goods, which can contribute to economic growth and consumer welfare. TCO No. 1043104, made on 9 March 2011, is an example of this mechanism in action, granting free duty on certain gate valves that are not produced domestically, effective from the date of the application on 20 September 2010.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislative mechanism allows for reduced rates of customs duty on specified goods, provided certain criteria are met. The Act applies to any person or entity that seeks to import goods eligible for a TCO, thereby directly affecting the customs duty obligations of those importing such goods. Geographically, the Act's application is national, as it operates under the Commonwealth jurisdiction, ensuring uniform application across Australia. However, it excludes certain goods from eligibility as specified in section 269SJ of the Act. Additionally, the Act allows for the extension or restriction of its application through subordinate instruments, thereby providing flexibility in its implementation. The application process involves the CEO assessing whether the goods in question are substitutable by Australian-produced goods, and if no such substitutable goods exist, a TCO may be issued, as demonstrated in the case of TCO No. 1043104 concerning gate valves, which was granted after fulfilling these core criteria.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1043104 under the Customs Act 1901 (section 269F) establish the process for granting Tariff Concession Orders (TCOs) for specific goods. When a person applies for a TCO for certain goods (section 269F), the Chief Executive Officer of Customs (CEO) must assess whether the application is valid and meets the core criteria (sections 269C and 269SJ). If the CEO determines that no substitutable goods were produced in Australia in the ordinary course of business (section 269C), a TCO can be issued. The TCO declares that the specified goods are subject to a prescribed tariff item in the Customs Tariff Act 1995, resulting in a tariff concession, such as a reduced or free rate of customs duty (section 269P(3)).
The Act imposes several obligations on the parties involved. Firstly, applicants for a TCO must ensure their applications meet the criteria outlined in section 269C, including the absence of substitutable goods produced in Australia. Secondly, the CEO is required to assess applications promptly and publish notices in the Gazette to invite submissions from interested parties (subsection 269K(1)). The CEO must also ensure that any TCOs made are in compliance with the Act and do not disadvantage non-Commonwealth persons or impose liabilities for actions taken prior to the TCO's registration (subsection 269S(1)).
In terms of consequences for non-compliance or breach, the Customs Act 1901 does not explicitly outline specific offences or penalties related to the issuance or application of TCOs. However, general provisions within the Act may apply to instances of fraud, misrepresentation, or failure to comply with customs regulations, which could result in civil or criminal penalties. For instance, knowingly providing false information in an application could lead to fines or imprisonment under sections pertaining to false statements or fraud. Additionally, failure to comply with customs duties or regulations could result in penalties such as fines or legal action to recover unpaid duties.
The Tariff Concession Instrument No. 1043104, which grants a tariff concession on certain gate valves, highlights the specific process and criteria for such concessions. The CEO's satisfaction that no substitutable goods were produced in Australia led to the issuance of this TCO, resulting in a zero-rate duty for the specified goods. The TCO came into effect on the date the application was lodged, and it beneficially affects the rights of importers, allowing them to apply for duty refunds on goods imported since that date. Importantly, the TCO does not impose any liabilities on any person, ensuring that it does not disadvantage non-Commonwealth entities.