EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1108056
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.
BHP Biliton Olympic Dam Corporation Pty Ltd applied for a TCO in respect of certain double acting piston diaphram pump valve parts on 03 March 2011.
Instrument
TCO No 1108056 was made on 18 July 2011. It declares that those certain double acting piston diaphram pump valve 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. 1108056 is taken to have come into force on 03 March 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 Commonwealth Parliament, governs the regulation of imports and exports in Australia, providing a framework for the administration of customs and excise duties. This Act facilitates the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can grant concessions, thereby lowering the rate of customs duty on specified goods. Enacted to address the need for flexible tariff structures that accommodate specific trade scenarios and promote economic efficiency, the Customs Act 1901 allows for the consideration of applications for tariff concessions to ensure that Australian industries can compete effectively in the global market. The Tariff Concession Instrument No. 1108056, made on 18 July 2011, exemplifies this mechanism by providing a zero-rate duty on certain double acting piston diaphram pump valve parts, reflecting the policy objective of supporting industry needs and facilitating the import of specific goods that are not produced domestically.
Scope and Application
The Customs Act 1901 applies to any person or entity seeking tariff concessions on imported goods, encompassing a broad spectrum of industries and transactions where the importation of specific goods is involved. The application of the Act extends nationally across Australia, with the Chief Executive Officer of Customs (CEO) being the designated authority responsible for assessing and approving Tariff Concession Orders (TCOs). These orders are pivotal in determining whether certain goods can benefit from a reduced customs duty rate. The Act specifies that a TCO may be granted if, on the date the application is lodged, no substitutable goods are produced in Australia. A substitutable good, as defined, is one that is produced domestically and can serve a similar purpose to the imported goods in question. Notably, the Act excludes certain goods from being subject to a TCO, as detailed in section 269SJ. The CEO must also ensure that any TCO made is consistent with the overarching framework set by the Customs Act and the Customs Tariff Act 1995. Once a TCO is made, it comes into effect from the date the application is lodged, but it does not retroactively affect the rights or liabilities of any parties involved prior to that date. The process for making a TCO includes mandatory consultation steps, such as publishing a notice in the Gazette, though no objections were received in this instance.
Key Provisions
The Tariff Concession Order No. 1108056, made under section 269F of the Customs Act 1901, specifies that certain double acting piston diaphragm pump valve parts will attract a zero rate of customs duty as opposed to the general rate of 5% (sections 269F and 269P(3)). This concession is contingent upon the Chief Executive Officer of Customs (CEO) being satisfied that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). As per the explanatory statement, the CEO did not receive any submissions opposing the order, and it is taken to have come into force on the date of the application, 03 March 2011 (subsections 269K(1) and 269S(1)).
The Act imposes certain obligations on the CEO when considering a Tariff Concession Order application. The CEO must ensure that the application is not in respect of goods specified in section 269SJ of the Act, which are ineligible for a concession. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods to which the concession applies (section 269F). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes the order should not be made (subsection 269K(1)). The CEO must also consider the definitions of 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' as provided in sections 269D, 269E, and 269F of the Act.
Failure to comply with the requirements of the Customs Act 1901, including the proper administration of Tariff Concession Orders, may lead to civil or criminal penalties. While the explanatory statement does not specify the exact penalties for breaches, it is reasonable to infer that penalties could include fines or other sanctions under the Act or related legislation. For instance, section 282 of the Customs Act 1901 imposes penalties for making false statements or representations in connection with the importation or exportation of goods, which could be relevant in the context of Tariff Concession Orders. The maximum penalties for such offences can be significant, depending on the severity and intent of the breach.