EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1117346
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.
South Australian Water Corporation applied for a TCO in respect of certain butterfly valves on 01 June 2011.
Instrument
TCO No 1117346 was made on 22 August 2011. It declares that those certain butterfly 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. 1117346 is taken to have come into force on 01 June 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 application of customs duty on imported goods, with the objective of regulating the importation and exportation of goods and ensuring appropriate revenue collection. One of the mechanisms under this Act is the establishment of Tariff Concession Orders (TCOs) through Part XVA, which allows for the application of reduced or no customs duty on certain goods if specific criteria are met. The Tariff Concession Instrument No. 1117346, made in 2011, was introduced to address a specific application by the South Australian Water Corporation for tariff concessions on certain butterfly valves, aiming to provide a concessional rate of duty where no substitutable goods were produced in Australia. The policy objective behind this instrument is to facilitate trade by reducing the duty burden on specific goods, thereby supporting economic activities and benefiting importers by potentially allowing refunds on duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, through the Tariff Concession Instrument No. 1117346, applies to the process of applying for and granting Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on specific goods. This legislation allows entities or individuals to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided these goods are not specified in section 269SJ of the Act and meet the core criteria outlined in sections 269C, 269D, and 269E of the Act. The CEO must decide whether the application meets these criteria, particularly ensuring that no substitutable goods are produced in Australia at the time the application is lodged. If satisfied, the CEO issues a TCO that declares the goods to which a specific item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby reducing the rate of duty on those goods. The instrument does not apply to any person other than the Commonwealth and does not impose any liabilities on such persons, although it does affect the rights of importers beneficially by allowing them to apply for a refund of duty on goods imported since the TCO took effect. The application process requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties, although in this case, no submissions were received. The TCO commences on the day the application is lodged, as specified in the Act.
Key Provisions
The Tariff Concession Instrument No. 1117346, issued under the Customs Act 1901 (the Act), provides a concession on customs duty for certain butterfly valves. Section 269F of the Act allows for the application of a Tariff Concession Order (TCO) by any person, and if the Chief Executive Officer of Customs (CEO) is satisfied that the application complies with the requirements, they must make a TCO (section 269P). The core criteria for making a TCO, as outlined in section 269C, include the condition that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The terms "substitutable goods", "ordinary course of business", and "goods produced in Australia" are defined in sections 269D, 269E, and 269B of the Act, respectively.
Under the Act, the CEO has specific obligations when processing a TCO application. Once a TCO application is accepted as valid, the CEO must publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). In the case of TCO No. 1117346, no submissions were received in response to this invitation. Additionally, the CEO must ensure that the TCO application meets the core criteria, and if satisfied, make a written TCO specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question (subsection 269P(3)).
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO may result in various consequences. Although the explanatory statement does not specify particular offences or penalties related to the making of TCOs, breaches of the Customs Act generally may incur civil or criminal penalties. Civil penalties can include fines, and in more serious cases, criminal penalties can include imprisonment. The exact penalties depend on the nature and severity of the breach, as outlined in the broader provisions of the Customs Act and any relevant regulations. The TCO itself does not impose any liabilities on any person, ensuring that the rights of importers are beneficially affected, including the right to apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations).