EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1136964
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 filtering machinery parts on 07 November 2011.
Instrument
TCO No 1136964 was made on 30 January 2012. It declares that those certain filtering machinery 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. 1136964 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework for the administration of customs duties and provides the basis for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can apply reduced rates of customs duty on certain goods. The Act was introduced to address the need for tariff concessions to facilitate trade and economic activity by lowering the cost of imported goods, provided they meet specific criteria. Specifically, under section 269F of the Customs Act, an applicant can seek a TCO if the goods in question are not prohibited and if no substitutable goods are produced in Australia. The policy objective is to support Australian businesses by making imported goods more affordable and competitive, thus potentially enhancing trade and economic growth. The Explanatory Statement for Tariff Concession Instrument No. 1136964, issued in 2012, illustrates this process in action, where filtering machinery parts were granted a tariff concession, effectively reducing the customs duty on these items from 5% to free.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). These orders allow for a lower rate of customs duty on specified goods, provided the application for the concession meets the core criteria outlined in the Act. The legislation applies to individuals or entities seeking tariff concessions for goods not specified as ineligible in section 269SJ, and it is effective across Australia as a national scheme. The CEO must ensure that the application does not pertain to goods that are or could be produced in Australia and must make a decision based on whether no substitutable goods are being produced domestically at the time the application is lodged. The CEO is also mandated to publish a notice in the Gazette inviting public submissions on the proposed concession, although in the case of TCO No. 1136964, no objections were received. The concession order takes effect from the date the application was lodged, providing benefits to importers who can apply for duty refunds on goods imported since the effective date of the order. Notably, the TCO does not retroactively disadvantage any party or impose new liabilities.
Key Provisions
The main operative sections of the Customs Act 1901 in relation to Tariff Concession Orders (TCOs) are sections 269C, 269F, and 269P (collectively referred to as the core criteria). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia on the day the application is lodged (section 269C), the CEO 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 (section 269P(3)).
The Act imposes several obligations on parties applying for a TCO. An applicant must ensure that their application for a TCO is made in accordance with section 269F and that it meets the core criteria specified in section 269C. Additionally, section 269K requires the CEO to publish a notice in the Gazette once an application is accepted as valid, inviting any person who believes the TCO should not be made to lodge a submission with the CEO. This ensures transparency and provides an opportunity for objections to be raised.
Failure to comply with the requirements of the Customs Act 1901 or the regulations governing TCOs could lead to civil or criminal consequences. Although the Explanatory Statement does not specify penalties, breaches of customs legislation can result in fines and, in severe cases, imprisonment. The exact penalties would depend on the specific nature and severity of the breach.
The Tariff Concession Order No. 1136964, which applies to certain filtering machinery parts, came into force on 7 November 2011, the date on which the application was lodged (subsection 269S(1)). Importantly, this TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person in respect of actions taken before the date of registration. Importers, however, can benefit from this TCO by applying for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).