EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112412
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.
Sunset Equipment applied for a TCO in respect of certain pipeline section construction pipe heating machines on 13 April 2011.
Instrument
TCO No 1112412 was made on 11 July 2011. It declares that those certain pipeline section construction pipe heating 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. 1112412 is taken to have come into force on 13 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 Australian Parliament, provides a framework for the administration of customs and excise duties, including the ability to grant tariff concession orders (TCOs) that reduce or eliminate customs duties on certain goods. The Customs Act 1901 was introduced to streamline the customs process, facilitate trade, and provide relief to industries that may be at a competitive disadvantage due to high import duties. In 2011, the Chief Executive Officer of Customs issued Tariff Concession Instrument No. 1112412 under this Act, which applied to certain pipeline section construction pipe heating machines. The instrument was made to provide a tariff concession for these goods, reducing their duty rate to free, as no substitutable goods were being produced in Australia at the time of the application. This concession aims to support the competitiveness of Australian industries by reducing the cost of importing these specific goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the creation of Tariff Concession Orders (TCOs) which allow for a reduced rate of customs duty on certain goods. This applies to any person who submits an application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods that are not specified in section 269SJ of the Act. A TCO can only be made if the CEO is satisfied that the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The geographic reach of this legislation is national, as it applies to goods entering Australia and pertains to the entire Commonwealth. The application of this legislation is not limited by state or territory boundaries. There are, however, specific exclusions as outlined in section 269SJ which detail goods that cannot be subject to a TCO. The CEO’s authority to extend or restrict the application of TCOs is governed by subordinate instruments, such as regulations, which provide further detail on the process and criteria for making such orders.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1112412 under the Customs Act 1901 include sections 269C, 269B, 269D, 269E, 269P(3), and 269SJ. These sections define the criteria for making a Tariff Concession Order (TCO) and outline the conditions under which the Chief Executive Officer of Customs (CEO) may grant a TCO. Section 269C mandates that a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Sections 269B, 269D, and 269E provide definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," respectively. Section 269P(3) requires that if the CEO is satisfied with the application, a written order must be made. Finally, section 269SJ specifies the goods that cannot be subject to a TCO.
The obligations imposed by this Act on parties or entities include ensuring that any TCO applications submitted are compliant with the defined criteria. Specifically, applicants must demonstrate that no substitutable goods were produced in Australia on the application date. The CEO has the obligation to review the application, consult with relevant parties, and publish notices inviting submissions if necessary. The CEO must also ensure that the terms of the TCO are correctly applied and that any refunds or adjustments to duties are made in accordance with the provisions of the Act and its Regulations.
Breach of the obligations set out in this Act may lead to civil or criminal consequences. Under section 269M of the Customs Act 1901, failure to comply with a TCO or providing false information in an application can result in penalties. The penalties for such breaches can include fines and, in some cases, imprisonment. For example, under section 10 of the Crimes Act 1914, a person found guilty of an offence involving customs duty fraud could face up to five years imprisonment. Additionally, the CEO may also take action to recover any incorrectly paid duties or to impose additional penalties as specified in the Act and its Regulations.