EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1113794
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.
Onesteel Piping Systems applied for a TCO in respect of certain plug valves on 27 April 2011.
Instrument
TCO No 1113794 was made on 18 July 2011. It declares that those certain plug valves 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. 1113794 is taken to have come into force on 27 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 Commonwealth Parliament, includes provisions for Tariff Concession Orders (TCOs) under Part XVA, which provide for lower rates of customs duty on certain goods. This legislative framework was designed to address the need for targeted tariff reductions to support specific industries or goods that face competitive disadvantages due to the lack of local production. The Explanatory Statement for Tariff Concession Instrument No. 1113794 details a particular instance where the Chief Executive Officer of Customs granted a concession on certain plug valves, reducing their duty rate from the general 5% to free, effective from the date the application was lodged, 27 April 2011. This was done after determining that no substitutable goods were produced in Australia at the time of the application, fulfilling the core criteria outlined in the Act. The process involved publishing a notice in the Gazette inviting any objections, which did not receive any responses, thereby allowing the concession to proceed without impediment.
Scope and Application
The Customs Act 1901 provides a framework for Tariff Concession Orders (TCOs) that can be applied for by individuals or entities seeking lower customs duty rates for specific goods. Under this scheme, the Chief Executive Officer of Customs (CEO) can grant a TCO if certain criteria are met, specifically if the goods in question are not produced in Australia and have no substitutable goods produced domestically. This process applies to all goods except those specifically excluded under section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The TCOs have a national reach, affecting all importers of the specified goods across Australia. Importantly, the TCO does not impose any liabilities or disadvantage any person other than the Commonwealth and can be retroactively applied to imports since the date the application was lodged. The CEO must also publish notices inviting submissions from interested parties, although no submissions were received for TCO No. 1113794, which was granted on 18 July 2011 for certain plug valves, reducing their duty rate to free from the general rate of 5%.
Key Provisions
The key operative sections of the legislation are sections 269C, 269F, 269P, and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. If the CEO is satisfied that the application is valid and meets the core criteria, they must make a TCO under section 269P(3). The core criteria are outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. Section 269SJ specifies the goods that cannot be subject to a TCO.
The Act imposes several obligations on the parties it governs. An applicant must ensure that their TCO application is valid and meets the core criteria, particularly that no substitutable goods were produced in Australia on the day the application was lodged. The CEO has the responsibility to assess the validity of the application and decide whether it meets the core criteria. Upon determining that a TCO application meets the criteria, the CEO must issue a written TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties, although this step did not result in any submissions in this case.
The legislation includes provisions for offences, penalties, and consequences for breach. Although the explanatory statement does not detail specific offences or penalties, it is implied that non-compliance with the Act's requirements, such as submitting a false application or providing misleading information, could lead to legal consequences. The nature of these consequences would depend on the specific breaches and could potentially involve civil or criminal penalties, depending on the severity of the offence.
The Tariff Concession Order No. 1113794, which came into force on 27 April 2011, is a specific instance where the CEO granted a TCO for certain plug valves, applying a zero rate of duty instead of the general 5% duty. This order was made based on the CEO's satisfaction that no substitutable goods were produced in Australia. Importantly, the TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person. Importers, however, may benefit from applying for a refund of duty on goods imported since the TCO's effective date.