EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1116105
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 winding machines on 19 May 2011.
Instrument
TCO No 1116105 was made on 08 August 2011. It declares that those certain winding 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. 1116105 is taken to have come into force on 19 May 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, provides a framework for the administration of customs duties and includes provisions for Tariff Concession Orders (TCOs) as part of its Part XVA. These TCOs offer a reduced rate of customs duty on specified goods, subject to certain criteria. The primary problem or gap this legislative provision aims to address is ensuring that Australian industries can access goods at a lower cost, thus promoting competitiveness and economic efficiency by allowing for the import of goods that are not produced domestically. The policy objective behind this is to facilitate trade by reducing the tariff burden on specific goods, thereby benefiting businesses and consumers alike. The Tariff Concession Instrument No. 1116105 exemplifies this process, where the CEO of Customs granted a concession for certain winding machines, effectively setting their duty rate to free, provided no substitutable goods were produced in Australia at the time of the application.
Scope and Application
The Tariff Concession Instrument No. 1116105 under the Customs Act 1901 provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on specific goods. This legislation applies to entities or individuals who have applied for a Tariff Concession Order (TCO) for goods, provided the goods are not specified as ineligible in section 269SJ of the Act. The concession applies when the CEO is satisfied that no substitutable goods are produced in Australia in the ordinary course of business, as defined under sections 269C, 269D, 269E, and 269F. The instrument came into effect on 19 May 2011, the date on which the application for the TCO was lodged, and it applies nationally across Australia. The TCO specifically reduced the duty on certain winding machines to free, down from the general rate of 5%, and the instrument ensures that it does not affect any existing rights or impose new liabilities on individuals or entities other than the Commonwealth. The CEO is required to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO, though in this case, no submissions were received.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1116105 under the Customs Act 1901 (section 269F) allow for the application to the Chief Executive Officer of Customs (section 269C) for a Tariff Concession Order (TCO) in respect of goods, provided the goods are not specified in section 269SJ. If the application meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business (section 269C), the CEO must make a written order (section 269P(3)). This instrument declares that certain winding machines are subject to a concession, with a general duty rate of 5% reduced to free under the Customs Tariff Act 1995 (section 269S(1)).
The Act imposes certain obligations and requirements on the parties involved. When an application for a TCO is received, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not proceed (subsection 269K(1)). The CEO must then consider these submissions before making a decision. In the case of TCO No. 1116105, no submissions were received, and the order was made on 8 August 2011. Importers of the goods covered by the TCO are entitled to apply for a refund of any duty paid on imports since the date the TCO was taken to have come into force, as per paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 can result in various consequences. While specific offences and penalties for breach are not detailed in the Explanatory Statement, general penalties under the Act may include fines and imprisonment for serious breaches. The maximum penalties depend on the nature and severity of the offence, but they are outlined in other sections of the Customs Act and associated regulations. Entities that do not adhere to the conditions set out in a TCO may face financial penalties or other enforcement actions, which could include the imposition of back duties or other financial liabilities.