EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127539
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.
Promains applied for a TCO in respect of certain pipe sawing machines on 15 August 2011.
Instrument
TCO No 1127539 was made on 07 November 2011. It declares that those certain pipe sawing 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. 1127539 is taken to have come into force on 15 August 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, establishes a framework under which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to apply lower rates of customs duty to specific goods. This legislative instrument responds to the need for flexibility in tariff rates to support economic activities by reducing costs for businesses that import particular goods not produced locally. The problem or gap addressed by this Act is the potential economic disadvantage faced by businesses that rely on importing goods for which there are no suitable Australian-made alternatives. The policy objective is to promote efficient market operations and enhance competitiveness by allowing for tariff concessions where necessary.
In the case of Tariff Concession Instrument No. 1127539, the instrument was introduced to address an application from Promains for a TCO concerning certain pipe sawing machines. The CEO of Customs determined that these machines qualified for a tariff concession because no substitutable goods were being produced in Australia. Consequently, the instrument declares that these specific machines are subject to a free rate of duty, down from the general rate of 5%, effective from the date the application was lodged, 15 August 2011. This instrument exemplifies the Act's intent to facilitate tariff reductions where it is evident that local production is not feasible or economically viable.
Scope and Application
The Tariff Concession Instrument No. 1127539, made under the Customs Act 1901, applies to certain pipe sawing machines and provides for a tariff concession that reduces the customs duty on these goods to zero. This concession is available to any person importing these specific machines into Australia. The Act applies at the Commonwealth level, and the geographic reach pertains to the importation of goods into Australia. The application of the TCO is not restricted to particular entities or industries but is open to any importer of the specified goods. The concession is granted if the Chief Executive Officer of Customs determines that no substitutable goods are produced in Australia at the time of application. Notably, the Act excludes certain goods from being subject to a tariff concession, as outlined in section 269SJ. The instrument extends the application of the Act by providing specific relief on the duty for the named goods, subject to the conditions and criteria set out in the Customs Act 1901.
Key Provisions
The Customs Act 1901, under Part XVA, establishes a framework where Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). Section 269F allows a person to apply to the CEO for a TCO in relation to specific goods, with a lower rate of customs duty applying to these goods if the TCO is granted. A TCO application can only proceed if the CEO is satisfied that the goods are not those specified in section 269SJ, which excludes certain goods from being eligible for a TCO. According to section 269C, the CEO must determine if the application meets the core criteria, which include the absence of substitutable goods produced in Australia on the day the application was lodged, as defined by section 269D and section 269E. Section 269B outlines that 'substitutable goods' refer to those produced in Australia that could be used in the same manner, including design use, as the goods in question.
The Act imposes several obligations on the parties involved. Under section 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be granted. This notice must be published as soon as practicable after accepting the application as valid. If no submissions are received, the CEO proceeds to assess the application against the core criteria. Upon determining that the application meets these criteria, the CEO must issue a written TCO, as outlined in section 269P(3), specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
Failure to comply with the requirements set forth by the Customs Act 1901 can lead to various consequences. For instance, if a TCO is granted improperly, it may result in an incorrect tariff being applied, which could lead to financial discrepancies and potential legal repercussions. Section 269P(3) also highlights that the CEO must ensure the application meets the core criteria before issuing a TCO, and any failure to do so could result in the TCO being contested or overturned. While the Act does not specify particular offences or penalties related to the issuance of TCOs, breaches of the Customs Act generally can result in significant penalties, including fines and imprisonment, depending on the nature and severity of the breach.