EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1053813
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.
Airefrig Pty Ltd applied for a TCO in respect of certain condensate air conditioning pumps on 8 December 2010.
Instrument
TCO No 1053813 was made on 16 March 2011. It declares that those certain condensate air conditioning pumps 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. 1053813 is taken to have come into force on 8 December 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 Commonwealth Parliament, establishes a framework for the regulation of customs and excise duties. This Act was introduced to facilitate international trade by providing a structured process for the assessment and collection of customs duties on imported goods, as well as to offer relief through tariff concession orders where appropriate. The explanatory statement for Tariff Concession Instrument No. 1053813, made under the Customs Act, demonstrates the application of this framework in a specific case. Airefrig Pty Ltd successfully applied for a tariff concession order for certain condensate air conditioning pumps, resulting in a reduced duty rate from 5% to free. This was achieved because the Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, thereby meeting the core criteria outlined in the Act. The policy objective of this instrument is to support Australian businesses by making certain imported goods more competitively priced, thus encouraging their use and integration into the domestic market.
Scope and Application
The Tariff Concession Instrument No. 1053813, issued under Part XVA of the Customs Act 1901, applies to entities or individuals seeking tariff concessions on specific goods imported into Australia. This instrument was enacted to provide a mechanism by which the Chief Executive Officer of Customs can lower the rate of customs duty on certain goods, provided they meet the core criteria outlined in the Act. Specifically, the application for a Tariff Concession Order (TCO) must demonstrate that no substitutable goods are produced in Australia at the time of application. The geographic reach of this legislation is national, affecting importers across Australia. The TCO applies to the goods specified in the instrument, in this case, certain condensate air conditioning pumps, and the general rate of duty on these goods is reduced to free, whereas the usual rate is 5%. The application of this instrument is restricted to goods not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Any subordinate instruments or regulations that further detail the process or criteria for TCOs extend the application of the Act, but the primary legislation and the specific TCO govern the scope and effect of the tariff concessions granted.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1053813, issued under the Customs Act 1901, concern the application and approval process for Tariff Concession Orders (TCOs) (section 269F). Specifically, section 269C of the Act outlines the core criteria that must be satisfied for an application to be successful: namely, that on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business (section 269D and section 269E). If these criteria are met, the Chief Executive Officer of Customs (CEO) is required to issue a written order, a TCO, applying a prescribed tariff item from Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)).
This instrument imposes obligations on both the CEO and the applicant. The CEO must ensure that the application meets the core criteria before issuing a TCO and must publish a notice in the Gazette inviting any objections to the TCO (subsection 269K(1)). In this case, no submissions were received in response to the published notice. The applicant, Airefrig Pty Ltd, must demonstrate that the goods for which they seek a TCO do not have substitutable goods produced in Australia in the ordinary course of business.
Should any party breach the conditions set out in the Act, penalties may apply. However, the explanatory statement does not specify any particular offences or penalties for failure to comply with the TCO provisions. The Act itself may contain broader provisions concerning penalties for non-compliance with customs regulations, which could be applicable here. Importantly, the TCO does not impose any liabilities on any person other than the Commonwealth and does not affect any rights as at the date of registration (subsection 269S(1)).