EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135850
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.
Emerson Network Power applied for a TCO in respect of certain power modules on 25 October 2011.
Instrument
TCO No 1135850 was made on 16 January 2012. It declares that those certain power modules 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. 1135850 is taken to have come into force on 25 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 Commonwealth Parliament, established a framework for the administration of customs and excise duties in Australia. Among its provisions, Part XVA of the Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide lower rates of customs duty on certain goods. This legislative measure was introduced to address the problem of ensuring that Australian businesses have access to competitively priced goods without being at a disadvantage due to high customs duties, particularly where no substitutable goods are produced domestically. The policy objective is to facilitate the importation of goods that are not manufactured in Australia, thereby promoting economic efficiency and consumer choice. Emerson Network Power's application for a TCO concerning specific power modules, which was approved on 16 January 2012, exemplifies this policy in action by providing tariff relief on these goods, thereby reducing the duty from 5% to free.
Scope and Application
The Customs Act 1901, under its Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply reduced rates of customs duty to specific goods. This legislation allows for the application of a lower customs duty rate to goods that are subject to a TCO, provided that the application meets certain core criteria, such as the absence of substitutable goods produced in Australia at the time the application was lodged. The application process involves a public notice in the Gazette, inviting submissions from interested parties, although in some cases, such as Tariff Concession Instrument No. 1135850, no submissions may be received. The TCO mechanism is designed to benefit importers by allowing them to claim refunds of duty on goods imported since the effective date of the TCO, which is typically the date on which the application was lodged. This particular TCO, made on 16 January 2012, pertains to certain power modules, reducing their duty rate from 5% to free, effective from 25 October 2011.
Key Provisions
The main operative sections of the Customs Act 1901, specifically under Tariff Concession Orders (TCOs), provide a framework for the Chief Executive Officer of Customs (CEO) to grant lower customs duty rates on certain goods. Section 269F allows for applications to be made for a TCO concerning specific goods, while Section 269C outlines the core criteria that must be met for such an application to be successful. According to this section, a TCO can be granted if no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged. Additionally, Section 269P(3) mandates that if the CEO is satisfied with the application, a written order must be made declaring the goods subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations and requirements imposed by the Act on the parties involved are primarily centred around the application and assessment process. The CEO must ensure that any TCO application is not in respect of goods specified in Section 269SJ, which lists goods that cannot be subject to a TCO. If the application meets the core criteria, the CEO must make a written order specifying the prescribed item of Schedule 4 to the Tariff that applies to the goods. Furthermore, under Section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who may object to the TCO. This notice must be published as soon as practicable after accepting the application as valid.
The Act also stipulates the consequences for non-compliance or breach of its provisions. While the explanatory statement does not explicitly outline specific offences or penalties, it is reasonable to infer that breaches of the Act or non-compliance with TCO regulations could lead to civil or criminal consequences. Typically, such breaches may result in penalties, including fines or other sanctions, as provided for under relevant sections of the Customs Act 1901 and the Customs Regulations 1999. However, the exact penalties are not detailed in the explanatory statement provided.