EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113719
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.
Investech Pty Ltd applied for a TCO in respect of certain air handling machines on 28 April 2011.
Instrument
TCO No 1113719 was made on 19 September 2011. It declares that those certain air handling 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. 1113719 is taken to have come into force on 28 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 application of customs duties on imported goods. This Act allows for the introduction of Tariff Concession Orders (TCOs) to provide duty concessions on specific goods, thereby addressing economic and trade policy objectives. The problem or gap that the Act aims to address includes ensuring that the application of customs duties aligns with broader economic strategies, such as promoting industry competitiveness and facilitating trade. The Explanatory Statement for Tariff Concession Instrument No. 1113719 clarifies the process by which Investech Pty Ltd successfully applied for a TCO concerning certain air handling machines, resulting in a reduction of the duty rate from 5% to free. The instrument was introduced to ensure that these goods, which have no substitutable Australian-produced alternatives, benefit from tariff concessions. The policy objective is to provide relief to importers and promote the efficient functioning of the relevant industry.
Scope and Application
The Customs Act 1901 applies to individuals, businesses, and entities involved in the importation of goods into Australia. Specifically, Tariff Concession Orders (TCOs) under Part XVA of the Act pertain to applications made by persons seeking a reduction in customs duty for specific goods. The scope of this legislation extends to any entity or individual who imports or intends to import goods into Australia and seeks to benefit from a lower rate of customs duty as determined by a TCO. The application process and the criteria for issuing a TCO are strictly outlined in the Act, ensuring that the Chief Executive Officer of Customs (CEO) can make informed decisions based on the production status of substitutable goods in Australia. The application process also includes a mandatory publication in the Gazette to allow for public submissions, although in the case of TCO No 1113719, no submissions were received.
Geographically, the application of this legislation is national, as it pertains to imports into Australia and the customs duties levied under the Customs Act 1901. However, the production of substitutable goods in Australia is a key criterion, meaning that the legislation also indirectly considers domestic manufacturing and production capabilities. The legislation does not explicitly set out exclusions or thresholds but relies on the core criteria for issuing TCOs, such as the absence of substitutable goods produced in Australia. Any further details or clarifications regarding the application of this Act may be found in subordinate instruments or regulations, which can extend or restrict the application as necessary.
Key Provisions
The Tariff Concession Order (TCO) No. 1113719 under the Customs Act 1901 (the Act) (s 269C) applies to certain air handling machines, reducing the customs duty from 5% to free. This concession is based on the fact that, as of the application date (28 April 2011), no substitutable goods were being produced in Australia in the ordinary course of business (s 269P(3)). The TCO was issued on 19 September 2011 and became effective from the date of application. This concession is beneficial to importers who can now claim refunds for duty paid on imports of these machines since the effective date of the TCO (Reg. 126(1)(r)).
The obligations imposed by the Act on the parties involve ensuring that the goods in question are not substitutable by Australian-made products, and that the application for the TCO is lodged correctly and meets the core criteria as outlined in the Act. The Chief Executive Officer of Customs (the CEO) must also publish a notice in the Gazette inviting submissions from any interested parties regarding the TCO application (s 269K(1)). The CEO, in this instance, did not receive any submissions. The TCO does not affect the rights of any person other than the Commonwealth, and does not impose any liabilities on any person.
Breaching the provisions of the Customs Act 1901 can result in various penalties. The specific offences and penalties are not detailed in the explanatory statement; however, generally, the Act provides for both civil and criminal penalties for breaches. Civil penalties can include fines, and in more serious cases, criminal penalties can include imprisonment. The exact penalties would depend on the specific nature and severity of the breach. The statement does not provide specific maximum penalties for this TCO, but it is reasonable to infer that the penalties would be consistent with those generally applicable under the Customs Act 1901.