EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135481
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 condensor and compressor assemblies on 24 October 2011.
Instrument
TCO No 1135481 was made on 16 January 2012. It declares that those certain refrigeration condensor and compressor assemblies 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. 1135481 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 was enacted to regulate the import and export of goods in Australia and provide for the imposition and collection of customs duty. To address the need for tariff concessions in certain circumstances, Part XVA of the Act establishes a framework for Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 1135481 was introduced on 16 January 2012 to provide tariff concessions on certain refrigeration condensor and compressor assemblies, following an application by Refrigeration Equipment Sales Pty Ltd. The instrument was enacted by the Chief Executive Officer of Customs, who is mandated under section 269F of the Act to make TCOs if an application meets the core criteria, specifically if no substitutable goods are produced in Australia. The policy objective of the TCO is to provide tariff relief to importers of specified goods, thereby potentially reducing costs and increasing competitiveness. The instrument came into force on the date the application was lodged, 24 October 2011, and does not affect existing rights or impose new liabilities on persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically through Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) that apply a lower rate of customs duty to certain goods. This process is available to any person who applies to the CEO, provided the goods in question are not listed in section 269SJ of the Act, which excludes specific goods from TCO eligibility. The CEO must ensure that no substitutable goods are produced in Australia on the day the application is lodged, as defined by sections 269C, 269D, 269E, and 269F of the Act, before making a decision on the application. If the application meets the core criteria, the CEO issues a TCO, which applies a reduced duty rate to the specified goods as per the Customs Tariff Act 1995. In the case of Refrigeration Equipment Sales Pty Ltd, a TCO was issued for certain refrigeration condenser and compressor assemblies, reducing the duty from 5% to free. This order came into effect on the date of the application, 24 October 2011, and does not affect any pre-existing rights or liabilities, though it does allow for duty refunds to importers of these goods.
Key Provisions
The main operative sections of this legislation are sections 269F, 269C, 269B, 269D, 269E, 269P, 269K, and 269S. Section 269F permits a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C 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 269B clarifies definitions for terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods". Section 269P(3) states 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 applies. Section 269K(1) requires the CEO to publish a notice in the Gazette after accepting a TCO application as a valid application, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. Finally, section 269S(1) provides that a TCO is taken to have come into force on the day on which the application for the TCO was lodged.
The obligations and requirements imposed by the Act include that any person applying for a TCO must ensure 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. Additionally, the CEO is required to decide whether the application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that a TCO application meets the core criteria, they must make a written order 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 applies. Furthermore, the CEO is required to publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made.
Any breach of the requirements or obligations set out in the Customs Act 1901 may result in civil or criminal consequences, including fines and imprisonment. The maximum penalties for breaches of the Customs Act are set out in section 238 of the Act and include fines of up to $22,000 for individuals and $110,000 for bodies corporate, as well as imprisonment for up to two years for individuals and five years for bodies corporate. Additionally, any person who is found to have contravened a TCO may be liable to pay a penalty of up to $11,000 for each offence, as well as any relevant customs duty and goods and services tax. It is important to note that these penalties are in addition to any other civil or criminal penalties that may apply.