EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051159
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.
BHP Billiton Olympic Dam Corporation Pty Ltd applied for a TCO in respect of certain air cooled, electric motor driven, 4 stage reciprocating, pressure lubricated compressors on 18 November 2010.
Instrument
TCO No 1051159 was made on 07 February 2011. It declares that those certain air cooled, electric motor driven, 4 stage reciprocating, pressure lubricated compressors 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.1051159 is taken to have come into force on 18 November 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, as amended, provides for the establishment of Tariff Concession Orders (TCOs) to reduce customs duty on certain imported goods. Enacted by the Parliament of Australia, this legislation aims to support Australian industries by providing tariff relief on goods that are not produced domestically or are substitutable. Specifically, it addresses the gap where certain imported goods could benefit from lower customs duty, potentially aiding businesses and consumers. The Tariff Concession Instrument No. 1051159, introduced on 7 February 2011, was made in response to an application by BHP Billiton Olympic Dam Corporation Pty Ltd for tariff concessions on specific air-cooled electric motor compressors. The policy objective here is to ensure that Australian businesses and consumers are not disadvantaged by the application of tariffs on goods that are not domestically produced or are substitutable, thereby fostering a competitive market.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to goods specified in the application and can result in a lower rate of customs duty for these goods. An entity or individual may apply to the CEO for a TCO if the goods in question are not listed in section 269SJ, which includes goods that cannot be subject to a TCO. The CEO must assess whether the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If satisfied, the CEO issues a TCO specifying the lower duty rate applicable to the goods. The application and issuance process are subject to public notification, although no objections were raised in the case of TCO No 1051159, which was made on 7 February 2011 for certain air-cooled, electric motor-driven, 4-stage reciprocating, pressure-lubricated compressors, reducing their duty rate to free from 5%. This order, which came into force on the date of application, 18 November 2010, benefits importers by allowing them to apply for duty refunds on imports of these goods since the commencement date.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1051159 include sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ of the Customs Act 1901. These sections collectively establish the framework for applying for, evaluating, and granting Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. The CEO then assesses the application against the criteria outlined in sections 269C and 269SJ, ensuring that the goods are not of a type that cannot be subject to a TCO and that no substitutable goods were produced in Australia at the time of the application. If these criteria are met, the CEO must make a written order under section 269P(3), which specifies the tariff concession applicable to the goods in question.
The obligations imposed on the parties by this legislation primarily concern the CEO and applicants for TCOs. The CEO is obligated to review applications for TCOs, ensuring they meet the specified criteria, and to make a decision within a reasonable timeframe. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties, as stipulated in section 269K(1). The applicant for a TCO must provide sufficient evidence to demonstrate that the goods in question meet the criteria for concession, particularly that no substitutable goods are produced in Australia. Once a TCO is granted, the applicant must comply with the terms and conditions of the order, including any requirements for claiming duty refunds as per paragraph 126(1)(r) of the Regulations.
In terms of consequences for non-compliance, the Customs Act 1901 does not explicitly outline offences or penalties for breaching the provisions related to TCOs. However, non-compliance with the terms and conditions of the TCO itself, such as incorrect or fraudulent claims for duty refunds, could result in penalties under the Customs Act and other relevant legislation. The penalties for such breaches can include fines and, in severe cases, imprisonment. The exact penalties depend on the specific nature of the breach and are determined by the courts.
The Tariff Concession Instrument No. 1051159, therefore, provides a structured process for granting tariff concessions while placing certain responsibilities on both applicants and the CEO. By ensuring that no substitutable goods are produced in Australia, the legislation aims to benefit importers of the specified goods by reducing their duty obligations, thereby potentially stimulating trade and investment.