EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045101
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.
Atlas Copco Compressors applied for a TCO in respect of certain combined screw compressors and reciprocating boosters on 05 October 2010.
Instrument
TCO No 1045101 was made on 23 December 2010. It declares that those certain combined screw compressors and reciprocating boosters 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. 1045101 is taken to have come into force on 05 October 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, provides a framework for the administration of customs and excise duties, including the establishment of a scheme for Tariff Concession Orders (TCOs) under Part XVA. This scheme was introduced to address the issue of providing tariff relief for goods that are not produced domestically, thereby supporting the importation of such goods for domestic use or re-export. In line with the policy objective to facilitate trade and economic efficiency, the Chief Executive Officer of Customs is empowered to make TCOs that apply a lower rate of customs duty to goods for which no substitutable goods are produced in Australia. This mechanism ensures that industries reliant on imported goods can compete effectively within the domestic market without the burden of high import tariffs. The Tariff Concession Instrument No. 1045101, issued on 23 December 2010, is an example of this process, applying to certain combined screw compressors and reciprocating boosters, reducing their duty rate from 5% to free.
Scope and Application
The Customs Act 1901, under Part XVA, enables the Chief Executive Officer (CEO) of Customs to issue Tariff Concession Orders (TCOs) which lower the rate of customs duty on specified goods. An entity or person may apply to the CEO for a TCO if the goods in question are not specified in section 269SJ of the Act as those that cannot be subject to a TCO. A TCO application meets the core criteria if no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged, as outlined in section 269C. For the purposes of this Act, definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B, respectively. If the CEO is satisfied that the application meets the core criteria, they must make a TCO, as stated in subsection 269P(3). This instrument applies to the Commonwealth and affects the rights of importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations. The TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration to disadvantage that person or impose liabilities in respect of anything done or omitted to be done before the date of registration. The scope of this Act is national, affecting entities and individuals involved in the importation of goods subject to TCOs.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1045101 under the Customs Act 1901 (section 269F) allow for the application of a Tariff Concession Order (TCO) in respect of goods. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, they are required to make a written order declaring that the specified goods are subject to a lower rate of customs duty (section 269C and 269P(3)). Specifically, Instrument No. 1045101 applies to certain combined screw compressors and reciprocating boosters, granting them a duty-free rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes specific obligations on parties applying for a TCO. An applicant must ensure their application is not in respect of goods specified in section 269SJ of the Act, which outlines goods ineligible for TCOs. Furthermore, the CEO must satisfy themselves that the application meets the core criteria, which includes verifying that no substitutable goods are produced in Australia on the day the application is lodged (section 269C). The CEO must also publish a notice in the Gazette, inviting submissions from interested parties before making a decision (subsection 269K(1)).
Any breach of the conditions set out in the Customs Act 1901 can result in significant penalties. Although the Explanatory Statement does not explicitly mention specific offences or penalties for non-compliance with TCOs, general provisions under the Customs Act 1901 include both civil and criminal penalties for breaches of customs regulations. Civil penalties may include fines, and in severe cases, criminal penalties can lead to imprisonment. Importers, however, are not disadvantaged or imposed liabilities under the TCO, and they can apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).