EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1124697
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.
Denso Automotive Systems Australia Pty Ltd applied for a TCO in respect of certain valves on 26 July 2011.
Instrument
TCO No 1124697 was made on 17 October 2011. It declares that those certain 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. 1124697 is taken to have come into force on 26 July 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, governs the regulation of imports and exports, including the imposition of customs duties. To address the need for tariff concessions that can benefit certain industries by reducing the duty on specific imported goods, Part XVA of the Customs Act 1901 was introduced, allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs). The objective of this legislative framework is to provide relief to industries that are unable to compete domestically with imported goods by offering tariff concessions, thus fostering fair trade practices and supporting economic development without imposing undue burdens on importers or other stakeholders. The process involves applications for TCOs that must meet specific criteria, such as the absence of substitutable goods produced in Australia, and undergoes consultation to ensure transparency and fairness.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedure for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to applications made by individuals or entities seeking a tariff concession for specified goods. The scope of the legislation extends to any goods that are not prohibited under section 269SJ of the Act and meet the criteria outlined in sections 269C, 269B, and 269D. The instrument applies nationally, affecting the importation of goods into Australia and the associated customs duties. The instrument does not disadvantage any person, including importers, who may benefit from a refund of duty on goods imported since the effective date of the TCO. The CEO's decision to grant a TCO is contingent on satisfying that no substitutable goods were produced in Australia on the date the application was lodged, as defined by section 269P(3). The application process also includes public consultation, as mandated by subsection 269K(1) of the Act, although in this case, no submissions were received. The commencement of the TCO is deemed to be on the date the application was lodged, ensuring that the rights of persons, other than the Commonwealth, are not adversely affected by the concession.
Key Provisions
The Tariff Concession Order No. 1124697 under the Customs Act 1901, which was made on 17 October 2011, specifically pertains to certain valves and declares that they are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies. This declaration was made by the Chief Executive Officer (CEO) of Customs, who was satisfied that no substitutable goods were produced in Australia at the time of the application. The general rate of duty on these goods is 5%, but the Tariff Concession Order (TCO) establishes a rate of duty of free for the goods subject to the TCO.
Entities such as Denso Automotive Systems Australia Pty Ltd, which applied for this concession on 26 July 2011, must adhere to the core criteria outlined in section 269C of the Act. This requires that on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business. The definitions of 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' are provided in sections 269D, 269E, and 269F respectively. If the CEO determines that these criteria are met, they are required by subsection 269P(3) to make a written order declaring the application as a TCO.
The obligations imposed by this Act on the parties involved include the requirement for the CEO to assess applications against the core criteria and make a decision based on this assessment. The CEO must also publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made, as per subsection 269K(1). If no submissions are received, the CEO can proceed to make the TCO. Additionally, the Act ensures that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities for actions taken before the TCO's effective date.
Under section 269S(1) of the Act, the TCO is considered to have come into force on the date the application was lodged, which in this case is 26 July 2011. Any breaches of the provisions outlined in the Act can lead to penalties. For instance, if an entity fails to comply with the terms of the TCO or provides false information in their application, they may face legal consequences. The maximum penalties for such breaches, while not explicitly stated in the explanatory statement, could include fines and other sanctions as provided under the Customs Act 1901 and related regulations.