EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1134596
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 Pty Ltd applied for a TCO in respect of certain dc circuit breakers on 14 October 2011.
Instrument
TCO No 1134596 was made on 09 January 2012. It declares that those certain dc 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. 1134596 is taken to have come into force on 14 October 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, was introduced to establish a framework for the administration of customs and excise duties and to provide for related matters. Specifically, Part XVA of the Act facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce the rate of customs duty on certain goods. The instrument F2012L00640, known as Tariff Concession Instrument No. 1134596, was created in response to an application by ABB Australia Pty Ltd for a TCO concerning certain dc circuit breakers. The Tariff Concession Order was issued on 9 January 2012, granting a duty-free status to these goods, as it was determined that no substitutable goods were produced in Australia. The objective of this concession is to support the importation of these specific goods without incurring the standard customs duty, thereby benefiting importers by potentially allowing them to claim refunds for duties paid on these goods since the effective date of the order, which is 14 October 2011.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This legislation applies to any person or entity that wishes to apply for a TCO concerning specific goods, thereby allowing for a lower rate of customs duty on those goods. The Act mandates that the CEO must ensure that the application does not pertain to goods specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business, a TCO will be issued, effectively applying a prescribed lower rate of duty from the date of the application. The TCO in question, No. 1134596, applies to certain dc circuit breakers, reducing their duty from 5% to free. This order came into force on the date the application was lodged, 14 October 2011, and does not disadvantage any person or impose new liabilities, though it does provide beneficial rights to importers seeking refunds for duties paid prior to the order’s effective date.
Key Provisions
The Tariff Concession Instrument No. 1134596 primarily focuses on the application of Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901 (the Act) (s269F). This instrument declares that certain DC circuit breakers are subject to a reduced rate of customs duty as per item 50 of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), which is free duty, as opposed to the general rate of 5% (s269P(3)). This is contingent on the Chief Executive Officer of Customs (the CEO) being satisfied that no substitutable goods were produced in Australia on the day the application was lodged, which is a requirement under section 269C of the Act (s269C).
The Act imposes specific obligations on the CEO to evaluate whether a TCO application meets the core criteria, as outlined in section 269B of the Act (s269B). If the CEO is satisfied that the application meets these criteria, they are required to make a written order (a TCO) and declare that the goods in question are subject to the prescribed item of Schedule 4 to the Tariff (s269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be made to submit their reasons (s269K(1)).
In the case of TCO No. 1134596, the CEO determined that no submissions opposing the concession were received, thereby proceeding with the order. The instrument stipulates that the TCO will be effective from the date the application was lodged, which is 14 October 2011 (s269S(1)). This means that the reduced duty rate applies retroactively to that date, and importers can apply for a refund of duty on goods imported since then (para126(1)(r) Regulations).
The legislation ensures that the rights of persons, excluding the Commonwealth, will not be adversely affected by the TCO. Specifically, it states that the TCO does not impose any new liabilities on any person and does not disadvantage them regarding actions taken before the registration date of the TCO. The main beneficiaries of this TCO are the importers, who will see a reduction in customs duty on the specified goods.
Any breach of the provisions of the Customs Act 1901, including failure to comply with the terms of a TCO, may result in civil or criminal penalties. The maximum penalties for contraventions of the Customs Act can include substantial fines and, in some cases, imprisonment. The specifics of these penalties are not detailed within the explanatory statement, but they are governed by the broader provisions of the Act and related legislation.