EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1103551
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 Australia Pty Ltd applied for a TCO in respect of certain condensate air conditioning pumps on 24 January 2011.
Instrument
TCO No 1103551 was made on 18 April 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. 1103551 is taken to have come into force on 24 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 Australian Parliament, provides a framework for the administration of customs and excise duties, and includes provisions for Tariff Concession Orders (TCOs). The purpose of these TCOs is to allow for a lower rate of customs duty on certain goods, provided that the application for such a concession meets specified criteria, including the absence of substitutable goods produced in Australia. This mechanism was introduced to address issues surrounding the importation of goods where domestic production is either non-existent or insufficient to meet demand at competitive rates. TCO No. 1103551 was made in response to an application by Airefrig Australia Pty Ltd for tariff concessions on certain condensate air conditioning pumps, effectively reducing the duty on these goods from the general rate of 5% to free, based on the determination that no substitutable goods were produced in Australia. The legislative process involved publishing a notice in the Gazette to invite submissions on the application, which in this case, did not receive any. The tariff concession is designed to benefit importers by allowing them to apply for a refund of duty on goods imported since the effective date of the concession, without imposing any new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to lower the customs duty on certain goods. This provision applies to any person or entity seeking a concession on the duty for specific goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. The Act's application is national, with the TCO mechanism available across Australia. However, certain goods specified in section 269SJ of the Act are ineligible for TCOs. The instrument in question, TCO No. 1103551, was made on 18 April 2011, and it declared that certain condensate air conditioning pumps are subject to a free rate of duty, effective from 24 January 2011, the date the application was lodged. This order does not retroactively affect any rights or liabilities, ensuring that the rights of importers are positively impacted while no new liabilities are imposed on any person.
Key Provisions
The Tariff Concession Instrument No. 1103551, under the Customs Act 1901, applies a lower rate of customs duty to certain condensate air conditioning pumps as specified in the instrument (s 269C, s 269P(3)). This reduction is due to the application by Airefrig Australia Pty Ltd, which met the core criteria set by section 269C of the Act, meaning no substitutable goods were being produced in Australia at the time of the application (s 269SJ). Consequently, the Chief Executive Officer of Customs (CEO) issued the instrument, declaring that these pumps are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free status for these goods (s 269P(3)).
The Act imposes several obligations on the parties involved. Airefrig Australia Pty Ltd, as the applicant, must ensure their application complies with the criteria outlined in section 269C, which includes demonstrating that no substitutable goods were produced in Australia. The CEO, on the other hand, must review the application and, if satisfied that it meets the criteria, issue a TCO. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed (s 269K(1)). In this case, no submissions were received, leading to the issuance of the TCO.
In terms of penalties and consequences, the Act does not explicitly state penalties for non-compliance with the TCO provisions. However, any breach of the Customs Act 1901 or the Customs Tariff Act 1995 could lead to civil or criminal penalties as outlined in the respective Acts. For example, knowingly making a false statement in relation to the importation or exportation of goods can result in penalties, including fines and imprisonment (s 236 Customs Act 1901). Similarly, any misuse or non-compliance with the terms of the TCO could potentially lead to legal action, fines, or other sanctions under the relevant legislation.