EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112959
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.
Kembla Watertech Pty Ltd applied for a TCO in respect of certain pipeline clearing and repairing robot system on 18 April 2011.
Instrument
TCO No 1112959 was made on 11 July 2011. It declares that those certain pipeline clearing and repairing robot system 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. 1112959 is taken to have come into force on 18 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, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This legislative instrument addresses the problem of ensuring that Australian businesses can access goods at a lower customs duty rate when no substitutable goods are produced domestically. The Tariff Concession Instrument No. 1112959, issued on 11 July 2011, provides a specific example of this process, applying to certain pipeline clearing and repairing robot systems, for which the CEO determined that no substitutable goods were produced in Australia. Consequently, this TCO grants these goods a duty-free status, down from the general rate of 5%, benefitting importers who can apply for duty refunds for imports since the TCO's effective date of 18 April 2011. The CEO published a notice inviting objections to the TCO application, but no submissions were received. The TCO aims to support Australian businesses by ensuring they have access to necessary imported goods without the burden of high customs duties, provided no domestic alternatives exist.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 1112959, applies to any individual or entity that seeks to import goods eligible for a tariff concession order (TCO) under the Act. Specifically, this Act enables the Chief Executive Officer of Customs to grant lower rates of customs duty on goods specified in a TCO, provided certain criteria are met. The legislation allows for applications to be made by any person for goods that are not excluded under section 269SJ of the Act, and if the CEO determines that no substitutable goods are produced in Australia, a TCO can be issued. This instrument affects the pipeline clearing and repairing robot systems, which are subject to a tariff concession reducing the duty rate from 5% to free. The TCO applies nationally and has no stated exclusions aside from those specified in section 269SJ of the Act, and it does not impose any liabilities on persons other than the Commonwealth. Additionally, the scope of the Act may be extended or restricted through subordinate instruments as deemed necessary by the CEO.
Key Provisions
The primary operative sections of the Customs Act 1901, as relevant to Tariff Concession Order (TCO) No. 1112959, are sections 269C, 269F, 269P, and 269SJ (paragraphs 1-3). Section 269F allows for applications to the Chief Executive Officer (CEO) of Customs for a TCO, and section 269C specifies the core criteria that must be met for such an application. This includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets the criteria, they must issue a TCO, as outlined in section 269P. The TCO in question, No. 1112959, pertains to certain pipeline clearing and repairing robot systems, granting them a tariff concession that reduces the duty rate from the general 5% to free.
Under the Customs Act 1901, the CEO of Customs is mandated to ensure that applications for TCOs are processed in accordance with the stipulated criteria. This includes verifying that the goods in question are not specified in section 269SJ, which lists goods ineligible for TCOs. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties if they believe there are reasons why a TCO should not be issued. The CEO is also required to consider any submissions received and decide whether to proceed with the TCO. In the case of TCO No. 1112959, no submissions were received, allowing the CEO to proceed with the issuance of the TCO.
Failing to comply with the requirements of the Customs Act 1901 can result in both civil and criminal consequences. While the Act does not specify detailed penalties for breaches related to TCOs, breaches of other sections of the Customs Act can incur significant penalties. For instance, knowingly making a false statement or representation can result in a fine of up to 10,000 penalty units or imprisonment for up to two years, or both, under section 271. For TCO-specific breaches, the consequences would generally align with the penalties for similar customs-related offences. The Act also includes provisions for the recovery of unpaid duties and interest, as well as potential legal actions against those who fail to comply with its requirements.
The Tariff Concession Order No. 1112959 has several implications for the parties it governs. For Kembla Watertech Pty Ltd, the company that applied for the TCO, this order effectively reduces their customs duty on the specified pipeline clearing and repairing robot systems to zero, making their products more competitive. Importers of these goods can also benefit by applying for a refund of duty paid on imports since the TCO was taken to have come into force. Importantly, the TCO does not impose any new liabilities on any person, including the Commonwealth, and does not affect the rights of any person as at the date of registration in a manner that would disadvantage them or impose liabilities for actions taken prior to the registration date.