EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111412
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.
Emerson Network Power applied for a TCO in respect of certain data centre computer server cooling machines on 05 April 2011.
Instrument
TCO No 1111412 was made on 20 June 2011. It declares that those certain data centre computer server cooling 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. 1111412 is taken to have come into force on 05 April 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 administration of customs duties, including provisions for Tariff Concession Orders (TCOs). This legislative instrument, F2011L02209, was introduced to address the need for tariff concessions on specific goods, facilitating smoother trade and potentially lowering costs for businesses importing these goods. The explanatory statement accompanying this instrument highlights that Tariff Concession Instrument No. 1111412 was enacted in response to an application by Emerson Network Power for a tariff concession on certain data centre computer server cooling machines, effective from 5 April 2011. The policy objective here is to provide relief to importers by reducing the customs duty on specified goods, thereby promoting trade and economic efficiency. The instrument was introduced without any adverse submissions, reflecting its alignment with broader legislative aims to support industry needs.
Scope and Application
The Customs Act 1901, through the Tariff Concession Instrument No. 1111412, establishes a framework for the application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) in relation to specific goods. This legislation applies to any person or entity seeking a reduction in customs duty for goods that are not produced in Australia and for which no substitutable goods are produced domestically. The scope of the Act is focused on the importation of goods, ensuring that the application of tariff concessions does not negatively impact the importer's rights, nor impose any new liabilities. The geographic reach of this Act is national, as it applies throughout Australia in accordance with the Commonwealth's legislative authority. The Act excludes certain goods specified in section 269SJ, which cannot be subject to a TCO. Additionally, the CEO is required to consult by publishing a notice in the Gazette, inviting any interested party to lodge a submission if they oppose the making of a TCO. In this case, Emerson Network Power applied for and was granted a TCO for specific data centre computer server cooling machines, effective from the date the application was lodged, 5 April 2011.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1111412 include sections 269C, 269B, and 269P of the Customs Act 1901. Section 269C requires that a Tariff Concession Order (TCO) application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B defines the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' as used in the Act. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, the CEO must issue a written TCO order.
The Act imposes specific obligations and requirements on the CEO regarding the processing of TCO applications. According to the Act, once the CEO accepts a TCO application as valid, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted. The CEO must also ensure that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these conditions are met, the CEO is required to make a TCO.
In terms of potential consequences for breach, the Customs Act 1901 does not explicitly detail offences or penalties for non-compliance with the TCO process. However, any failure to adhere to the legislative requirements, such as not publishing a notice in the Gazette or not correctly assessing the core criteria, could result in the TCO being invalid. This might lead to legal challenges or disputes regarding the tariff concessions granted. The Act ensures that the rights of importers will be beneficially affected and that no liabilities are imposed on any person other than the Commonwealth.
The TCO itself, once granted, does not affect the rights of any person, except the Commonwealth, as at the date of registration, nor does it impose any liabilities on any person. Importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force. This refund mechanism ensures that the benefits of the TCO are passed on to the importers without any retroactive imposition of liabilities.