EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1134597
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 1134597 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. 1134597 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 Australian Parliament, provides a framework for the imposition of customs duties on imported goods, including the ability to grant tariff concession orders (TCOs) to lower the duty on certain goods. This scheme was introduced to address the need for flexibility in the application of customs duties, allowing for tariff reductions where appropriate. Tariff Concession Order No. 1134597, issued on 9 January 2012, exemplifies this flexibility by applying to certain dc circuit breakers, which now attract a duty rate of free instead of the general rate of 5%. This order was made following an application by ABB Australia Pty Ltd, which demonstrated that no substitutable goods were produced in Australia, meeting the core criteria set out in the Act. The policy objective underpinning this measure is to support the importation of goods that are not domestically produced, thereby enhancing the competitiveness of Australian businesses.
Scope and Application
The Customs Act 1901, through its Part XVA, governs the process of making Tariff Concession Orders (TCOs) which provide for lower rates of customs duty on specific goods. The Chief Executive Officer of Customs (CEO) is empowered to make these orders if an application is made and if certain criteria are met. These criteria include the absence of substitutable goods produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, 269E, and 269F of the Act. Once the CEO is satisfied that an application meets these core criteria, a written order is made, and the goods specified in the order are subject to a reduced rate of duty. For instance, Tariff Concession Order No. 1134597, made on 9 January 2012, applies a free rate of duty on certain DC circuit breakers, which previously had a general duty rate of 5%. This order came into effect on 14 October 2011, the date the application was lodged, and benefits importers by allowing them to apply for duty refunds for imports since that date. The application process requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties, although in the case of TCO No. 1134597, no such submissions were received.
Key Provisions
The main operative sections of the Customs Act 1901, as highlighted in the explanatory statement for Tariff Concession Instrument No. 1134597, pertain to the creation and implementation of Tariff Concession Orders (TCOs) (sections 269C, 269F, 269P, and 269S). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria and does not relate to goods specified in section 269SJ, they must make a TCO (section 269P(3)). Section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. This instrument specifically relates to dc circuit breakers, where the general rate of duty is 5%, but the rate of duty for these goods under the TCO is free.
The Customs Act imposes several obligations on parties involved with TCOs. The CEO must ensure that an application for a TCO is not in respect of goods that cannot be subject to a TCO and must decide whether the application meets the core criteria. If satisfied, the CEO must make a written order declaring the goods to which the TCO applies. Additionally, upon accepting a TCO application as valid, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). The TCOs do not affect the rights of any person other than the Commonwealth and do not impose any liabilities on any person in respect of anything done or omitted before the TCO's registration date.
Breach of the provisions under the Customs Act may lead to various civil or criminal consequences. Although the explanatory statement does not explicitly outline specific offences or penalties for failing to comply with the Act's requirements, general provisions of the Customs Act may apply. These could include fines and imprisonment for breaches related to false statements, smuggling, and other customs-related offences. The maximum penalties for these offences can vary significantly, depending on the severity and nature of the breach. Importers who benefit from the TCO can apply for a refund of duty on goods imported since the TCO's effective date under paragraph 126(1)(r) of the Regulations.