EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138231
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.
McConnell Dowell Constructions (Aust) Pty Ltd applied for a TCO in respect of certain marine wharf parts on 16 November 2011.
Instrument
TCO No 1138231 was made on 30 January 2012. It declares that those certain marine wharf 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. 1138231 is taken to have come into force on 16 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. 1138231, enacted in 2012 under the Customs Act 1901, provides a solution to the problem of high customs duty rates on certain imported goods that have no local substitutes. The Act allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that reduce the duty on specified goods if they are not produced domestically. This initiative was introduced to foster trade and economic efficiency by enabling lower-cost imports of goods that cannot be manufactured in Australia. The policy objective is to support industries by reducing the cost of essential goods, thus promoting competition and benefiting consumers. The instrument came into force on the date of the application, 16 November 2011, and importers can apply for duty refunds for imports since that date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) which can result in a reduction of customs duty on certain goods. This legislation applies to any person or entity that may apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods, provided that the goods are not those specified in section 269SJ, which cannot be subject to a TCO. A TCO may be issued if the CEO determines that the application meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia at the time the application was lodged. The TCO applies nationally, aligning with the overarching provisions of the Customs Act and the Customs Tariff Act 1995. In the case of TCO No. 1138231, the CEO issued a concession that resulted in the free import of certain marine wharf parts, which previously had a general duty rate of 5%. This concession came into effect on 16 November 2011, the date the application was lodged, and benefits importers by allowing them to seek refunds on duties paid for such goods imported since that date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1138231, under the Customs Act 1901, primarily deal with the conditions and criteria for the creation of a Tariff Concession Order (TCO). Section 269F allows for an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must proceed to issue a TCO. Section 269P(3) further stipulates that the CEO must issue a written order if they find that the application meets the core criteria. In this case, the instrument declares that certain marine wharf parts are subject to a free rate of duty instead of the general rate of 5% (Section 269P(3)).
The Act imposes several obligations and requirements on both the applicant and the CEO. The applicant must ensure that the goods in question meet the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business at the time of application. The CEO, on the other hand, has the responsibility to determine whether the application meets the criteria and to issue the TCO if it does. Additionally, as per section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made. This was done for Instrument TCO No. 1138231, although no submissions were received.
The Act also outlines the potential consequences for breaches or non-compliance with its provisions. While the Explanatory Statement does not explicitly detail specific offences or penalties for breach, under the general framework of the Customs Act 1901, violations of the tariff provisions could potentially lead to criminal charges, fines, or other civil remedies. However, in the context of this particular TCO, no specific penalties are mentioned, and the focus remains on the tariff concession itself and the administrative processes involved in its application and issuance.