EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1136951
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.
Heldon Products Australia Pty Ltd applied for a TCO in respect of certain refrigeration parts on 07 November 2011.
Instrument
TCO No 1136951 was made on 30 January 2012. It declares that those certain refrigeration parts 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. 1136951 is taken to have come into force on 07 November 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 Tariff Concession Instrument No. 1136951, enacted in 2012, is a regulatory measure under the Customs Act 1901, designed to provide a lower rate of customs duty for certain goods. The instrument was introduced to address the need for tariff concessions for goods that are not produced in Australia and have no substitutable equivalents domestically, thereby facilitating the importation of these goods without the burden of high duty rates. The instrument was enacted by the Chief Executive Officer of Customs, in accordance with section 269F of the Act, after determining that the application met the core criteria specified in section 269C, namely that no substitutable goods were produced in Australia. The instrument aims to provide tariff relief to importers, as outlined in the explanatory statement, without imposing any liabilities or disadvantaging any persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, as amended, provides a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders apply to specific goods for which an applicant has requested a reduction in customs duty, provided certain criteria are met. An applicant, typically an entity such as a company, can submit an application to the CEO for a TCO in respect of goods, and if the CEO is satisfied that the application complies with the conditions outlined in the Act, a written order is made. The application process requires that no substitutable goods are being produced in Australia in the ordinary course of business on the date the application was lodged. The TCO applies nationally and the rights of importers are beneficially affected, allowing them to seek refunds on duty paid on goods imported since the effective date of the TCO. The TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration to disadvantage that person or impose any liabilities in respect of anything done or omitted to be done before the date of registration. The Tariff Concession Instrument No. 1136951, made under the Customs Act, is a specific example of such an order which applies to certain refrigeration parts, granting them a free rate of duty as opposed to the general rate of 5%.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for Tariff Concession Orders (TCOs) through Part XVA, enabling the Chief Executive Officer of Customs (the CEO) to issue orders that apply lower rates of customs duty to specified goods (section 269F). A person can apply for a TCO if the goods they seek to import are not listed in section 269SJ of the Act, which specifies goods that are ineligible for TCOs (section 269F). For an application to be considered, it must meet the core criteria outlined in section 269C of the Act, which requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269P of the Act respectively.
The Act imposes several obligations on the parties involved. The CEO must determine whether a TCO application meets the core criteria, and if satisfied, must make a written TCO order specifying the goods and the reduced duty rate (subsection 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions on the application as soon as practicable after accepting it as valid (subsection 269K(1)). In the case of TCO No. 1136951, the CEO did not receive any submissions opposing the order. Additionally, the Act specifies that a TCO comes into force on the day the application is lodged, with no retroactive effect on rights or liabilities (subsection 269S(1)).
Failure to comply with the provisions of the Act or the terms of a TCO may result in various consequences. While the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breaches, the Act generally provides for enforcement mechanisms to ensure compliance. For instance, incorrect claims for tariff concessions could lead to audits, investigations, or legal action by the Australian Customs and Border Protection Service. Penalties for breaches might include fines, additional duties, interest, and other financial liabilities as prescribed by the Customs Act or related regulations. Importers must ensure they comply with all terms of the TCO to avoid any adverse consequences.