EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1056338
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.
Tortech Pty Ltd applied for a TCO in respect of certain toroidal step down transformers on 30 December 2010.
Instrument
TCO No 1056338 was made on 28 March 2011. It declares that those certain toroidal step down transformers 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. 1056338 is taken to have come into force on 30 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 Australian Parliament, introduced a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (CEO) to provide tariff concessions on specific goods. This was established to address the need for targeted tariff reductions on goods for which there are no substitutable Australian-made alternatives, thereby encouraging the importation of these goods. The policy objective is to ensure that Australian consumers and businesses have access to a broader range of goods at reduced costs while supporting the importation of non-substitutable goods that cannot be produced domestically. The explanatory statement for Tariff Concession Instrument No. 1056338 details that the CEO made this order after concluding that no substitutable goods were produced in Australia for certain toroidal step down transformers, resulting in a tariff reduction from 5% to free. The instrument came into force on the date the application was lodged, 30 December 2010, and no submissions opposing the concession were received during the consultation period.
Scope and Application
The Customs Act 1901, as amended and supplemented by the Tariff Concession Instrument No. 1056338, provides a mechanism for granting tariff concessions on specified goods, allowing for a lower rate of customs duty on these goods. This legislation applies to entities and individuals who import goods specified in a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. The scope of the Act extends to any industry that imports the goods subject to a TCO, ensuring that such industries can benefit from the reduced duty rates. The geographic reach of this legislation is national, applying across Australia in accordance with Commonwealth laws. The Act does not apply to goods listed in section 269SJ of the Act, which are ineligible for tariff concessions. Furthermore, the Act allows for the application to be extended or restricted through subordinate instruments, enabling flexibility in managing tariff concessions. The commencement date of the TCO is the date on which the application was lodged, providing immediate benefits to importers of the specified goods.
Key Provisions
The main sections of the Tariff Concession Instrument No. 1056338, as referenced in the Customs Act 1901, establish the conditions under which the Chief Executive Officer of Customs (CEO) may grant a Tariff Concession Order (TCO) for certain toroidal step-down transformers (section 269F). A TCO application can be submitted by any person under section 269F, provided that the goods in question are not prohibited from receiving such concessions (section 269SJ). The CEO must ensure that the application meets the core criteria, which require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (sections 269C and 269P(3)). If the CEO is satisfied with the application, they must make a written order declaring that the goods are subject to a specified rate of customs duty (section 269P(3)).
The obligations imposed by the Act on the parties involved are primarily focused on the application process. The CEO must review the application, determine if it meets the core criteria, and make a decision based on whether substitutable goods were produced in Australia. The applicant must provide sufficient information to enable the CEO to make an informed decision. Additionally, under section 269K(1), the CEO is obligated to publish a notice in the Gazette, inviting submissions from any interested parties who may have objections to the granting of the TCO. Once a TCO is issued, the CEO must ensure that the rights of non-Commonwealth parties are not adversely affected and that any past transactions are not retroactively subjected to new liabilities.
In terms of the consequences for non-compliance, the Act does not explicitly outline criminal or civil penalties for failing to adhere to the terms of a TCO. However, any breaches of related customs regulations or failure to comply with the terms of the concession itself could lead to penalties as outlined in other sections of the Customs Act 1901 or associated regulations. These penalties can include fines and, in some cases, criminal charges for severe or repeated breaches. The specific penalties would depend on the nature and severity of the breach, as well as any additional relevant laws or regulations.