EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1106938
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.
BOC Ltd applied for a TCO in respect of certain gas recovering machines on 22 February 2011.
Instrument
TCO No 1106938 was made on 09 May 2011. It declares that those certain gas recovering machines 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. 1106938 is taken to have come into force on 22 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 was enacted to provide a framework for the regulation of customs and excise duties in Australia, including the provision for Tariff Concession Orders (TCOs). Enacted by the Commonwealth Parliament, the Act aims to facilitate trade by offering tariff concessions on certain imported goods, provided they meet specific criteria. Specifically, Tariff Concession Instrument No. 1106938, issued under the Act in 2011, addresses the problem of imposing lower customs duties on goods that are not produced in Australia and for which no substitutable goods are available domestically. In this case, BOC Ltd applied for a TCO concerning certain gas recovering machines, and the Chief Executive Officer of Customs granted the concession, resulting in a zero percent duty rate for these goods. The policy objective of this instrument is to support the import of goods that are not domestically produced, thereby benefiting importers and potentially stimulating trade and economic activity.
Scope and Application
The Tariff Concession Order No. 1106938 applies to certain gas recovering machines, which are specified goods under the Customs Act 1901. The order is directed at importers and entities involved in the importation of these machines, providing them with a tariff concession that reduces the duty rate from 5% to free, as long as the goods meet the criteria set out in the Customs Act. The scope of the legislation is national, operating within the framework of Australian federal law, and it extends to any entity or individual importing the specified machines into Australia. The Act does not explicitly exclude any particular entities or classes of goods, but it does specify that the goods subject to the TCO must not be of a type listed in section 269SJ of the Act, which includes goods that are of a type that cannot be subject to a tariff concession order. The application of the TCO is subject to the conditions and criteria outlined in the Customs Act, which can be extended or modified through subordinate instruments.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 1106938 (section 269F and 269C) govern the process and criteria for applying for and granting a Tariff Concession Order (TCO). If an applicant, such as BOC Ltd, submits an application to the Chief Executive Officer (CEO) of Customs for a TCO, and the CEO determines that the application meets the core criteria (section 269C), then a TCO will be made (section 269P(3)). These sections detail the application process and the conditions under which the CEO must grant the concession. The TCO will specify the particular goods and the prescribed tariff item from Schedule 4 of the Customs Tariff Act 1995, thus setting the rate of duty for the goods.
The obligations imposed by the Act on the parties include the requirement for the CEO to ensure that the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia at the time of the application (section 269C). Additionally, the CEO is obligated to publish a notice in the Gazette inviting any person who may have reasons to object to the TCO to lodge a submission (subsection 269K(1)). This ensures transparency and provides an opportunity for public scrutiny before the TCO is made.
In terms of consequences for breach, the Act does not explicitly state civil or criminal penalties for failing to comply with the TCO provisions. However, the Tariff Concession Instrument No. 1106938 specifies that the TCO does not affect the rights of any person adversely and does not impose liabilities on any person in respect of anything done or omitted before the registration date of the TCO (subsection 269S(1)). This means that any person who was already subject to duties before the TCO's effective date will not be retroactively penalised.