EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1137380
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 oil separators on 07 November 2011.
Instrument
TCO No 1137380 was made on 30 January 2012. It declares that those certain oil separators 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. 1137380 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 was enacted by the Australian Parliament and serves as the foundational piece of legislation governing customs duties and associated procedures within Australia. One of the mechanisms under this Act is the issuance of Tariff Concession Orders (TCOs), which allow for the reduction or elimination of customs duties on specific goods. The problem this legislation aims to address is the potential for domestic industries to be unfairly disadvantaged by higher customs duties, particularly when no equivalent goods are produced within Australia. This can provide a competitive edge to imported goods and potentially harm local production. The policy objective is to promote fair competition and support domestic industries by reducing the tariff burden on certain goods where no local alternatives exist. The explanatory statement for Tariff Concession Instrument No. 1137380, made in 2012, illustrates this process, detailing how certain oil separators were granted a tariff concession based on the absence of substitutable goods produced in Australia, thereby lowering the duty rate from 5% to free.
Scope and Application
The Tariff Concession Instrument No. 1137380 under the Customs Act 1901 applies to specific goods, namely certain oil separators, as determined by the Chief Executive Officer (CEO) of Customs. This instrument is triggered by an application under section 269F of the Act, where a party such as Heldon Products Australia Pty Ltd applies for a Tariff Concession Order (TCO) concerning goods that meet the core criteria outlined in the Act. A TCO is granted if the CEO determines that no substitutable goods are produced in Australia, in accordance with the definitions provided in sections 269D, 269E, and 269F of the Act. The instrument reduces the duty on these specific oil separators from the general rate of 5% to a free rate, effective from the date the application was lodged, as per subsection 269S(1) of the Act. The application of the TCO does not adversely affect the rights of any person, except for the Commonwealth, as per the provisions in the Act, and it does not impose any new liabilities on individuals or entities.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1137380, under the Customs Act 1901, focus on the establishment of Tariff Concession Orders (TCO) that apply to specific goods. Section 269F (1) allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO for certain goods. If the application does not pertain to goods that are explicitly excluded by section 269SJ, the CEO must then assess if the application meets the core criteria set out in section 269C. The core criteria include ensuring that on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. If these criteria are satisfied, the CEO is required under section 269P(3) to issue a written TCO, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thereby reducing the duty rate from the general 5% to free.
The Act imposes several obligations and requirements on the parties involved. For instance, the CEO must ensure that any TCO application is assessed against the criteria specified in section 269C, and must publish a notice in the Gazette inviting submissions from any interested parties once the application is accepted as valid (subsection 269K(1)). The CEO is also required to make a TCO if the application meets the core criteria, effectively granting tariff concessions to the applicant. Importers, on the other hand, are entitled to benefit from these concessions by applying for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations.
In terms of consequences for non-compliance, the Act does not explicitly outline specific offences or penalties related to the TCO process itself. However, any breaches of related customs regulations or misrepresentations in TCO applications could lead to criminal or civil penalties under broader customs laws. For example, providing false information in an application could result in penalties under the Crimes Act 1914 or the Customs Act 1901, including fines or imprisonment. Additionally, failure to adhere to the refund process for duty rebates could lead to financial penalties or legal action. The exact penalties for these breaches would depend on the specific nature of the offence and the relevant statutory provisions.