EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1119821
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.
Mobil Australia applied for a TCO in respect of certain heater exchangers on 21 June 2011.
Instrument
TCO No 1119821 was made on 05 September 2011. It declares that those certain heater exchangers 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. 1119821 is taken to have come into force on 21 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 was amended to introduce Tariff Concession Orders (TCOs) under Part XVA, which allows the Chief Executive Officer of Customs to apply a lower rate of customs duty on goods specified in these orders. This was enacted to address the issue of ensuring that certain goods which are not produced domestically in the ordinary course of business receive tariff concessions, thus encouraging importation where local production is not feasible. The Tariff Concession Instrument No. 1119821 was introduced on 5 September 2011, following an application by Mobil Australia for TCOs on certain heater exchangers on 21 June 2011. The policy objective was to provide tariff relief where appropriate, without disadvantaging any person or imposing liabilities on them. The instrument came into effect on the date of application, 21 June 2011, and no submissions were received in opposition to the concession.
Scope and Application
The Customs Act 1901, as extended by Tariff Concession Instrument No. 1119821, provides a framework for the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCOs) that lower the rate of customs duty on certain imported goods. This legislation applies to individuals or entities seeking tariff concessions for goods not produced in Australia in the ordinary course of business. The CEO assesses applications to ensure they meet the core criteria, which notably require the absence of substitutable goods produced in Australia. This instrument extends to national jurisdiction, impacting importers who can benefit from the reduced tariff rates on specified goods, in this case, certain heater exchangers, and potentially apply for duty refunds. The instrument does not disadvantage existing rights or impose new liabilities on non-Commonwealth entities. While the Act provides a broad scope, exclusions apply to goods specified in section 269SJ, which are ineligible for TCOs. Additionally, the CEO’s decision-making process includes public consultation, although no submissions were received in this instance. The TCO in question came into effect on the date of application, 21 June 2011, with no retroactive impact on existing duties or liabilities.
Key Provisions
The key operative sections of this legislation (F2011L02642) are sections 269F, 269C, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) for goods. Section 269C specifies the core criteria that a TCO application must meet, namely that no substitutable goods were produced in Australia on the day the application was lodged. Section 269P mandates that if the CEO is satisfied the application meets the core criteria, they must make a written order, i.e., a TCO. Section 269S outlines the commencement date of a TCO, which is the day the application was lodged.
The obligations imposed by this Act on parties or entities it governs include the requirement for applicants to ensure their applications meet the core criteria specified in section 269C. This involves verifying that no substitutable goods were produced in Australia on the date the application was lodged. The CEO must then make a written order if the application meets these criteria. The CEO also has an obligation to publish a notice in the Gazette inviting any person who believes the TCO should not be made to lodge a submission. In this case, no submissions were received. The rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the TCO came into force.
The Act does not specify any offences, penalties, or civil/criminal consequences for breaches. However, failure to meet the core criteria specified in section 269C could result in the CEO declining to make a TCO. This could potentially lead to financial disadvantages for applicants who do not qualify for the tariff concession. The Act ensures that the TCO does not affect the rights of a person as at the date of registration, so as to disadvantage that person or impose liabilities in respect of anything done or omitted before the registration date. This means that the TCO does not impose any liabilities on any person.