EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1101645
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.
Brenco Pty Ltd applied for a TCO in respect of certain coaxial laser thermal spray cladding machine powder feeders on 13 January 2011.
Instrument
TCO No 1101645 was made on 11 April 2011. It declares that those certain coaxial laser thermal spray cladding machine powder feeders 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. 1101645 is taken to have come into force on 13 January 2011.
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 under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This legislation was introduced to address the issue of ensuring fair customs duty rates on imported goods by allowing for tariff concessions where applicable. Specifically, the Customs Act provides for a reduced rate of customs duty on goods subject to a TCO, provided that the goods are not substitutable and are not produced in Australia in the ordinary course of business. Instrument No. 1101645, made under this Act on 11 April 2011, concerns a TCO for certain coaxial laser thermal spray cladding machine powder feeders, effectively granting them a free rate of duty instead of the general 5% rate. The policy objective is to support industries by reducing the cost of imported goods that have no Australian equivalent, thus promoting competitiveness and efficiency.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to any person or entity seeking to import specific goods into Australia and is designed to provide tariff concessions where certain conditions are met. The Act applies nationally and its scope is extended through the Customs Tariff Act 1995, which specifies the duty rates applicable to various goods. Importantly, the Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ. In the case of Brenco Pty Ltd, the CEO was satisfied that the application for a TCO concerning coaxial laser thermal spray cladding machine powder feeders met the core criteria, specifically that no substitutable goods were produced in Australia. Consequently, Tariff Concession Order No. 1101645 was made, granting free duty on these goods, effective from 13 January 2011. This order does not disadvantage any person or impose liabilities on anyone in respect of actions taken prior to its registration.
Key Provisions
The Tariff Concession Order No. 1101645 under the Customs Act 1901, as outlined in the explanatory statement, introduces a concession on customs duty for certain coaxial laser thermal spray cladding machine powder feeders. Section 269F of the Act allows an application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO), provided the goods are not specified in section 269SJ of the Act, which lists goods that are ineligible for a TCO. If the CEO is satisfied that the application meets the core criteria, they must issue a written order, as mandated by section 269P(3) of the Act. For the application to meet these criteria, it must be established that no substitutable goods are produced in Australia on the day the application is lodged, as per section 269C of the Act.
Under the obligations imposed by the Customs Act, the CEO is required to assess whether the application for a TCO aligns with the core criteria, which include verifying that no substitutable goods are produced domestically in the ordinary course of business. This assessment involves determining the meaning of 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' as defined in sections 269D, 269E, and 269F of the Act respectively. The CEO must also ensure that the application complies with the legislative framework, including the necessity to publish a notice in the Gazette (subsection 269K(1) of the Act), inviting submissions from interested parties. In the case of TCO No. 1101645, no submissions were received in response to the published notice.
In terms of potential breaches and penalties, the Customs Act does not explicitly detail the specific offences or penalties related to the contravention of a TCO. However, it is reasonable to infer that any failure to comply with the terms of a TCO could potentially lead to legal consequences under the broader provisions of the Customs Act, which may include fines or other civil or criminal penalties for non-compliance with customs regulations. While the explanatory statement does not provide explicit maximum penalties, it is understood that breaches of customs laws, in general, can result in significant financial penalties, and in severe cases, criminal prosecution.
The Tariff Concession Order No. 1101645 came into effect on the day the application was lodged, 13 January 2011, as per subsection 269S(1) of the Act. This commencement date ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date, as provided under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person, including the Commonwealth, and does not disadvantage anyone who held rights as of the date of registration.