EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107406
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.
Boyne Smelters applied for a TCO in respect of certain air compressors on 25 February 2011.
Instrument
TCO No 1107406 was made on 16 May 2011. It declares that those certain air compressors 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. 1107406 is taken to have come into force on 25 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, established a framework for Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain imported goods. The Tariff Concession Instrument No. 1107406, made on 16 May 2011, addresses the specific issue of applying tariff concessions to certain air compressors, as requested by Boyne Smelters. The instrument was made to provide a zero rate of customs duty on these goods, effective from 25 February 2011, the date the application was lodged. This initiative aligns with the policy objective of facilitating trade by lowering the cost of importing specified goods, provided no substitutable goods are produced in Australia. The process involved publishing a notice in the Gazette to invite objections, none of which were received, thus allowing the TCO to proceed without any adverse submissions.
Scope and Application
The Tariff Concession Instrument No. 1107406 applies to the goods specified in the Instrument, namely certain air compressors, as identified by Boyne Smelters in their application under section 269F of the Customs Act 1901. The application is subject to the core criteria outlined in section 269C of the Act, which stipulates that no substitutable goods were produced in Australia at the time the application was lodged. The geographic reach of the Act is national, as it applies across Australia, and the application of the Instrument is tied to the provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The Instrument does not exclude any particular persons or entities, but it specifically applies to those involved in the importation of the designated air compressors. The exemption criteria are defined by section 269SJ of the Act, which specifies goods that cannot be subject to a Tariff Concession Order. The application and effect of the Instrument are not restricted by any stated thresholds, but the relief provided is contingent on the goods not having substitutable alternatives produced domestically. The Instrument may be extended or restricted through subordinate instruments as necessary.
Key Provisions
The main sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods; section 269C, which sets out the core criteria that a TCO application must meet, such as the absence of substitutable goods produced in Australia; and section 269P(3), which requires the CEO to make a written order if the application meets the core criteria. The CEO must also publish a notice in the Gazette inviting submissions from any person who considers there are reasons why the TCO should not be made, as per section 269K(1).
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to assess whether a TCO application meets the core criteria. The CEO must ensure that no substitutable goods are produced in Australia on the day the application was lodged. Furthermore, upon acceptance of a TCO application, the CEO must publish a notice in the Gazette, inviting submissions from interested parties. The CEO must also decide whether to proceed with the TCO if no valid submissions are received. Importers, who are beneficiaries of the TCO, must apply for a refund of duty on goods imported since the TCO came into effect.
Any breach of the provisions of the Customs Act 1901 or associated regulations can lead to civil or criminal penalties. For instance, under section 269SJ, if an application is made for goods that cannot be subject to a TCO, this could be considered non-compliance. Penalties for breaches can include fines and, in serious cases, imprisonment. The maximum penalties are not explicitly stated in the explanatory statement but would be found in the relevant sections of the Customs Act 1901 and associated regulations. It is also important to note that the TCO does not affect the rights of any person, except the Commonwealth, in terms of imposing liabilities for actions taken before the TCO's registration.