EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135479
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.
Refrigeration Equipment Sales Pty Ltd applied for a TCO in respect of certain refrigeration compressors on 24 October 2011.
Instrument
TCO No 1135479 was made on 16 January 2012. It declares that those certain refrigeration compressors 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. 1135479 is taken to have come into force on 24 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, establishes a framework through which Tariff Concession Orders (TCOs) can be implemented by the Chief Executive Officer of Customs. The legislation was introduced to address the need for tariff reductions on specific goods, where no suitable Australian-made alternatives exist, thereby promoting economic efficiency and competitiveness. The explanatory statement for Tariff Concession Instrument No. 1135479 details that Refrigeration Equipment Sales Pty Ltd applied for a TCO for certain refrigeration compressors, which was granted on 16 January 2012. The policy objective of this measure was to provide tariff concessions to these goods by applying a free rate of duty, as no substitutable goods were produced in Australia. The Tariff Concession Order came into effect on the date the application was lodged, 24 October 2011, and benefits importers by allowing them to apply for duty refunds on imports made since that date.
Scope and Application
The Tariff Concession Instrument No. 1135479, made under the Customs Act 1901, applies to Refrigeration Equipment Sales Pty Ltd and the specific refrigeration compressors they applied for, which are now subject to a Tariff Concession Order (TCO). The Act provides a framework for the Chief Executive Officer of Customs to issue TCOs that lower the rate of customs duty on specified goods. This legislative instrument pertains to entities that apply for tariff concessions and the goods that are the subject of such applications. The scope of the legislation is national, given its foundation in Commonwealth law, and it extends to any entity that meets the criteria for a TCO as outlined in the Customs Act 1901. The instrument does not exclude any specific persons or entities but is contingent on the goods not being listed in section 269SJ of the Act, which details goods ineligible for TCOs. The TCO's geographic reach is nationwide, as it operates under the Customs Act 1901, which is a Commonwealth Act. Any subordinate instruments or regulations that extend or restrict the application of this TCO would need to be consistent with the core criteria and the overarching Customs Act 1901.
Key Provisions
The Customs Act 1901 includes provisions for the creation of Tariff Concession Orders (TCOs) under section 269F, which allow for a lower rate of customs duty on specified goods. These TCOs are made by the Chief Executive Officer of Customs (CEO) upon application by a person. For instance, in the case of TCO No. 1135479, Refrigeration Equipment Sales Pty Ltd applied for a concession on certain refrigeration compressors, which was subsequently granted by the CEO on 16 January 2012.
The CEO must ensure that the application does not pertain to goods listed in section 269SJ, which cannot be subject to a TCO. If the application is valid, the CEO must then verify that it meets the core criteria outlined in section 269C. A TCO application meets these criteria if, on the date of the application, no substitutable goods were being produced in Australia in the ordinary course of business. The definitions of these terms are provided in sections 269D, 269E, and 269F of the Act. If satisfied, the CEO must then issue a written TCO under section 269P(3). In this case, the CEO declared that the specified refrigeration compressors would be subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free, down from the general rate of 5%.
The Act imposes several obligations on the parties involved. The CEO must publish a notice in the Gazette once an application is accepted, inviting any interested parties to submit any objections to the TCO. In the instance of TCO No. 1135479, no submissions were received in response to the published notice. Furthermore, the TCO does not affect the rights of any person other than the Commonwealth, ensuring that it does not disadvantage or impose new liabilities on any party prior to the date of registration.
In terms of consequences, the Act does not specify any particular offences related to breaches of the TCO provisions. However, it does provide for civil and criminal penalties under various sections for other breaches of the Customs Act 1901. For instance, knowingly making a false statement or representation in an application for a TCO could lead to penalties under sections related to fraud or misrepresentation. Additionally, failure to comply with the customs duty provisions could result in fines or imprisonment, as outlined in the Act. It is important for all parties to adhere to the requirements of the TCO and the Customs Act to avoid any potential penalties or legal consequences.