EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1106306
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.
Stiebel Eltron (Aust) Pty Ltd applied for a TCO in respect of certain water heaters on 16 February 2011.
Instrument
TCO No 1106306 was made on 16 May 2011. It declares that those certain water heaters 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. 1106306 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 Australian Parliament, facilitates the application of tariff concessions on imported goods through the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation was introduced to address the gap in providing duty relief for imported goods where no substitutable Australian-produced goods exist, thereby encouraging import competition and potentially lowering consumer prices. The explanatory statement for Tariff Concession Instrument No. 1106306, made in 2011, exemplifies this process in action. Stiebel Eltron (Aust) Pty Ltd applied for a TCO for certain water heaters, and after the CEO of Customs was satisfied that no substitutable goods were produced in Australia, a TCO was issued, resulting in a reduction of the duty rate from 5% to free. The process also included a public consultation period, though no objections were received. The TCO came into effect on the date of application and does not disadvantage any parties or impose new liabilities, with potential benefits to importers through duty refunds.
Scope and Application
The Tariff Concession Instrument No. 1106306 is a regulation under the Customs Act 1901, and it pertains specifically to the application of Tariff Concession Orders (TCOs) concerning certain water heaters. The Act applies to any individual or entity seeking a concession on the customs duty of imported goods, provided that the goods do not fall under the category of goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The application of this Act is national, extending across Australia, as it falls under the Commonwealth jurisdiction. A key exclusion from the scope of the TCOs is any goods that are already being produced in Australia in the ordinary course of business and are substitutable for the imported goods in question. The regulation was enacted to provide a concession on the customs duty for the specific water heaters in question, reducing the general duty rate from 5% to free, and this concession is effective from the date the application was lodged, 16 February 2011. The application of the Act may be further defined or refined through subordinate instruments, which can provide additional specifications or conditions for the application of TCOs.
Key Provisions
The Customs Act 1901, under Part XVA, provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (section 269F). These orders permit a lower rate of customs duty for specified goods. To qualify for a TCO, an applicant must ensure that the goods in question do not fall under the category specified in section 269SJ, which includes goods that are not eligible for TCOs. Furthermore, the application must meet the core criteria outlined in section 269C, which necessitates that, on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business.
Entities and individuals subject to this Act must adhere to several obligations. Primarily, they must ensure that any application for a TCO complies with the specified criteria. This includes verifying that the goods in question do not have substitutable equivalents produced in Australia. Additionally, the CEO is required to publish a notice in the Gazette once an application is deemed valid, inviting any interested parties to submit any reasons why the TCO should not be made (subsection 269K(1)). Failure to respond to this notice does not automatically disqualify an application but ensures transparency and public input. Moreover, TCOs do not retroactively affect the rights of any person except the Commonwealth, meaning that any actions taken before the TCO's effective date remain unaffected (subsection 269S(1)).
Non-compliance with the provisions of the Customs Act 1901 can result in various penalties and consequences. While the Act does not explicitly outline specific offences or penalties for failing to meet the criteria for a TCO, breaches of customs regulations generally can lead to substantial penalties. For instance, under section 236 of the Act, individuals and entities can be subject to civil and criminal penalties for knowingly making false statements or representations. Civil penalties can include fines of up to $22,200 for individuals and $111,000 for corporations, while criminal penalties can extend to imprisonment for up to five years or both, depending on the severity and intent of the offence. These provisions underscore the importance of adhering to the Act's requirements to avoid legal repercussions.