EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043751
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.
Solar Turbines Australia applied for a TCO in respect of certain gas and liquid fuel metering valves on 24 September 2010.
Instrument
TCO No 1043751 was made on 23 December 2010. It declares that those certain gas and liquid fuel metering 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. 1043751 is taken to have come into force on 24 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, enacted by the Australian Parliament, establishes a framework for the imposition of customs duties on imported goods, amongst other things. To address the need for tariff concessions for certain goods, Part XVA of the Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on specified goods. This mechanism was introduced to ensure that Australian industries do not face unnecessary competitive disadvantages by having to pay duties on goods that could be locally produced. The process of applying for a TCO and the criteria that must be met are clearly outlined in the Act, with a particular focus on ensuring that the goods in question are not substitutable by products already manufactured in Australia. In the instance of Tariff Concession Order No. 1043751, made on 23 December 2010, the CEO was satisfied that the application from Solar Turbines Australia for certain gas and liquid fuel metering valves met the necessary criteria, resulting in a tariff rate of free duty for these goods.
Scope and Application
The Customs Act 1901 applies to individuals and entities seeking to import goods into Australia by establishing a framework through which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs (CEO). This Act is a Commonwealth legislation and pertains to the customs duty rates applicable to imported goods, offering potential tariff concessions for specified goods. A TCO is applicable when the CEO determines that no substitutable goods are produced in Australia, ensuring that the import of certain goods does not negatively impact local production. The TCO process is initiated when an application is made to the CEO, who then assesses whether the application meets the criteria set out in the Act, such as the absence of substitutable goods produced in Australia. The Act also mandates that the CEO publish a notice in the Gazette inviting submissions from interested parties, although in this instance, no submissions were received. Once a TCO is made, it applies retroactively to the date the application was lodged, thereby affecting the rights of importers beneficially by allowing them to apply for refunds of duty on goods imported since that date. Notably, the TCO does not disadvantage any person by imposing liabilities for actions taken before the date of registration.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1043751 under the Customs Act 1901 (section 269F) allow for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. If the CEO determines that the application meets the core criteria, as outlined in section 269C, a TCO is issued, effectively applying a lower rate of customs duty to the specified goods. For the gas and liquid fuel metering valves in this case, the TCO specifies that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of free, as opposed to the general rate of 5%.
The Act imposes several obligations on the parties involved. The applicant, in this case Solar Turbines Australia, must ensure that their application for a TCO meets the core criteria, particularly that no substitutable goods are produced in Australia on the day the application is lodged (section 269C). The CEO, upon receiving a valid application, must decide if it meets these criteria and, if so, issue a TCO. The CEO is also required to publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any interested parties regarding the proposed TCO, although in this case, no submissions were received. Additionally, the Act stipulates that the TCO does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person in respect of anything done or omitted before the date of registration (subsection 269S(1)).
The consequences for breach of the Act's provisions or the terms of the TCO are not explicitly detailed in the explanatory statement. However, it is reasonable to infer that failure to comply with the obligations under the Customs Act 1901 could lead to civil or criminal penalties as prescribed by other sections of the Act or related legislation. For instance, section 258 of the Customs Act 1901 generally provides for penalties for breaches of the Act, including fines and imprisonment, depending on the severity of the breach. Specific penalties for non-compliance with the TCO itself would need to be referred to the broader legislative framework governing customs duties and related administrative processes.