EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1131414
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.
Verve Energy applied for a TCO in respect of certain inverters on 14 September 2011.
Instrument
TCO No 1131414 was made on 05 December 2011. It declares that those certain inverters 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. 1131414 is taken to have come into force on 14 September 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 regulation of imports and exports, including the imposition of customs duty. In response to specific economic and industrial needs, the Act allows for the creation of Tariff Concession Orders (TCOs) under section 269F, which provide for a reduced or zero rate of customs duty on specified goods, provided they meet certain criteria. The primary issue the legislation addresses is the facilitation of trade and economic development by enabling lower tariff rates for goods that are not produced domestically or for which there are no suitable domestic substitutes. Tariff Concession Instrument No. 1131414 was introduced to grant tariff concessions to Verve Energy for certain inverters, reflecting the policy objective to support the renewable energy sector by reducing the customs duty on these specific goods to zero.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply lower rates of customs duty to specified goods. The Act applies to any person or entity seeking tariff concessions for goods, and it mandates that these goods must not be listed in section 269SJ, which excludes certain items from concession eligibility. The Act applies nationally within Australia, as it is a Commonwealth Act, and it is enforced uniformly across all states and territories. The Act stipulates that a TCO will only be granted if no substitutable goods are produced in Australia at the time of application, as per sections 269C and 269F. Additionally, the Act allows for the extension or restriction of its application through subordinate instruments, such as regulations that define terms like 'substitutable goods' and 'ordinary course of business'. The process requires public consultation as per section 269K(1), although in the case of TCO No. 1131414, no submissions were received in response to the published notice in the Gazette. This particular TCO, effective from 14 September 2011, benefits importers by potentially allowing them to claim refunds for duties paid on the specified goods since the TCO's effective date, without imposing any liabilities on non-Commonwealth entities.
Key Provisions
The primary operative sections of this legislation include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of goods. Section 269C further stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order declaring that the goods in question are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995.
Under this Act, the CEO of Customs has the obligation to evaluate TCO applications to determine whether they meet the core criteria. This involves verifying that no substitutable goods were produced in Australia at the time of application. If the application meets the core criteria, the CEO must issue a TCO, as mandated by section 269P(3). Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be made to submit their reasons to the CEO.
Failure to comply with the provisions of this Act can lead to various consequences. The Act does not explicitly state any offences, penalties, or civil/criminal consequences for non-compliance with the TCO provisions. However, the general legal framework under which the Customs Act 1901 operates includes potential enforcement actions and penalties for breaches of customs regulations. Importers can apply for a refund of duty on goods imported since the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations, without the TCO imposing any liabilities on any person. The Act ensures that the rights of persons other than the Commonwealth are not disadvantaged or impose liabilities for actions taken before the registration date of the TCO.