EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1106302
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.
Davey Water Products Pty Ltd applied for a TCO in respect of certain centrifugal pump parts on 16 February 2011.
Instrument
TCO No 1106302 was made on 23 May 2011. It declares that those certain centrifugal pump parts 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. 1106302 is taken to have come into force on 16 February 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 Parliament of Australia, establishes a framework for the application and administration of customs duties, including provisions for tariff concessions. This Act was introduced to streamline the process of applying for tariff concessions on specific goods, ensuring that businesses can more easily access reduced customs duties when appropriate. In 2011, Tariff Concession Instrument No. 1106302 was introduced under this Act to provide a tariff concession for certain centrifugal pump parts, addressing the need for specific tariff reductions where no suitable Australian-made alternatives existed. The policy objective was to support businesses by reducing the cost of importing these goods, thereby fostering competitiveness and potentially stimulating domestic production over time. The instrument was made effective from the date of application, ensuring that Davey Water Products Pty Ltd and other importers could benefit immediately from the reduced customs duty on the specified goods.
Scope and Application
The Tariff Concession Instrument No. 1106302, made under Part XVA of the Customs Act 1901, applies to the specific goods in question, which in this case are certain centrifugal pump parts. The Act authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide for a lower rate of customs duty on specified goods, provided certain criteria are met. The application of this Act is focused on the goods for which a TCO has been applied and granted, and it does not extend to any other goods unless specifically included in a subsequent TCO. The geographic reach of this legislation is national, as it operates under the authority of the Commonwealth of Australia. Importantly, the Act excludes goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. The Act can extend or restrict its application through subordinate instruments, such as regulations and orders made by the CEO. This particular TCO was effective from the date the application was lodged, 16 February 2011, and does not affect any pre-existing rights or impose liabilities for actions taken before its registration.
Key Provisions
The primary operative sections of the Customs Act 1901 as it pertains to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269SJ (section numbers referenced in parentheses). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application meets the core criteria outlined in section 269C and is not for goods specified in section 269SJ, the CEO must issue a TCO. Section 269P(3) requires the CEO to make a written order if satisfied that the application meets these criteria, declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations and requirements on the parties involved. The CEO must ensure that the application does not pertain to goods specified in section 269SJ and must determine whether the application meets the core criteria, particularly whether no substitutable goods were produced in Australia at the time of the application. This involves verifying that the goods in question are not produced domestically and that there are no domestic alternatives that could perform the same function. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. Davey Water Products Pty Ltd, in this instance, applied for a TCO for certain centrifugal pump parts, and the CEO confirmed that no substitutable goods were produced in Australia, thereby satisfying the core criteria.
Breaches of the requirements set out in the Customs Act 1901 can result in significant civil and criminal consequences. While specific offences and penalties are not detailed in the explanatory statement, the Act generally provides for penalties that can include fines and imprisonment for non-compliance with customs regulations. The severity of penalties can vary depending on the nature and extent of the breach. However, in the context of this specific TCO, there are no obligations or liabilities imposed on any person beyond what is stated in the Act, and the rights of importers will be beneficially affected, including the possibility of applying for a refund of duty on goods imported since the day the TCO came into force.