EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125309
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.
ABB Australia applied for a TCO in respect of certain circuit breakers on 27 July 2011.
Instrument
TCO No 1125309 was made on 31 October 2011. It declares that those certain circuit breakers 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. 1125309 is taken to have come into force on 27 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, establishes a framework for the administration of customs and excise duties, and includes provisions for Tariff Concession Orders (TCOs) under Part XVA. These TCOs aim to address the gap where certain imported goods, which are not produced in Australia and do not have substitutable domestic alternatives, may qualify for reduced or free customs duty rates. This legislative measure was introduced to foster fair competition and provide relief to consumers by potentially lowering the cost of certain imported goods. The Chief Executive Officer of Customs is authorised to make these orders if satisfied that the application meets the core criteria, specifically if no substitutable goods are produced in Australia at the time the application is lodged. Tariff Concession Instrument No. 1125309, which was made on 31 October 2011, is an example of this process in action, where ABB Australia successfully applied for a concession on certain circuit breakers, resulting in a reduction of the customs duty rate from 5% to free. This specific instrument was introduced without any submissions opposing the concession, and it does not disadvantage any persons or impose liabilities on anyone other than the Commonwealth.
Scope and Application
The Tariff Concession Order No. 1125309 under the Customs Act 1901 applies to specific circuit breakers imported into Australia by ABB Australia, granting them a concession on the customs duty applicable to these goods. The Act applies to entities such as ABB Australia that apply for tariff concessions on imported goods. The scope of the Act extends to any goods that are subject to a Tariff Concession Order (TCO) and ensures that such orders can only be made if no substitutable goods are produced in Australia and if the application meets the criteria set out in the Act. This particular TCO was made in respect of goods that, as of the application date, had a general rate of duty of 5% but were granted a tariff concession making them duty-free. The geographic reach of this legislation is national, as the Customs Act 1901 operates across the Commonwealth of Australia. The TCO does not impose any liabilities on persons other than the Commonwealth and does not affect any rights as at the date of registration, thus ensuring that importers can benefit from the reduced duty rates without retroactive disadvantage. This instrument extends the application of the Customs Act 1901 through the making of a specific TCO, which is subject to the conditions and criteria outlined in the Act.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1125309 under the Customs Act 1901 include sections 269C, 269F, 269P, and 269S. Section 269F allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of specific goods. If the CEO determines that the application does not pertain to goods specified in section 269SJ, which outlines goods ineligible for a TCO, the CEO must then assess whether the application meets the core criteria stipulated in section 269C. If the application satisfies these criteria, the CEO is obligated under section 269P(3) to issue a written order (a TCO) that specifies the goods and the applicable duty rate.
The obligations imposed on parties by this Act include the requirement for the CEO to ensure that no substitutable goods are produced in Australia on the day the application is lodged, as defined under sections 269B, 269D, and 269E. The CEO must also publish a notice in the Gazette inviting any interested parties to submit their views on the application as soon as practicable after accepting it as valid, as required by subsection 269K(1). The CEO's decision to issue a TCO must be based on satisfying these criteria and considering any submissions received.
If an individual or entity fails to comply with the requirements set out by the Customs Act 1901, they may face legal consequences. However, the explanatory statement does not explicitly outline specific offences, penalties, or consequences for breach. Typically, breaches of customs regulations can lead to civil or criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach. The maximum penalties would be in accordance with the broader provisions of the Customs Act 1901 and any related regulations.
The TCO itself does not affect the rights of any person, except the Commonwealth, in a way that would disadvantage them or impose liabilities for actions taken before the registration date, as per subsection 269S(1). Importers, however, benefit from the ability to apply for a refund of duty on goods imported since the TCO was taken to have come into force, under paragraph 126(1)(r) of the Regulations. This aspect ensures that any financial burden previously incurred by importers due to customs duty is alleviated by the concession.