EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139628
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.
Kathmandu Pty Ltd applied for a TCO in respect of certain pumps on 29 November 2011.
Instrument
TCO No 1139628 was made on 15 February 2012. It declares that those certain pumps 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. 1139628 is taken to have come into force on 29 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 Australian Parliament, establishes a framework for the administration of customs and excise duties. The Act was amended to introduce Tariff Concession Orders (TCOs) through Part XVA, which allows the Chief Executive Officer of Customs to grant concessions on customs duties for specific goods. This legislative change was introduced to address the gap where certain imported goods, which had no Australian-made equivalents, were subject to full customs duty rates despite being competitively priced. The policy objective behind this mechanism is to foster a level playing field for imported goods by reducing or eliminating customs duties, thereby supporting the competitive landscape of the Australian market without disadvantaging the Commonwealth or imposing new liabilities on individuals or entities. The introduction of TCOs ensures that the rights of importers are protected, allowing them to seek refunds for duties paid on eligible goods imported before the TCO's effective date.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which can be issued by the Chief Executive Officer of Customs (CEO) to apply lower customs duty rates to specific goods. This mechanism is available to any person who applies for a TCO in respect of goods that meet certain criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business. The scope of this legislation is limited to the goods specified in the TCO application and does not extend to any goods listed in section 269SJ of the Act, which are ineligible for TCOs. The application of this Act is national in reach, as it applies across all jurisdictions in Australia. Subordinate instruments may further define or refine the application of this Act, but no such instruments are indicated in the provided text. The rights of individuals and entities under this Act are protected, ensuring that no disadvantage or new liabilities are imposed retroactively by the issuance of a TCO.
Key Provisions
The Tariff Concession Order (TCO) No. 1139628, issued under section 269F of the Customs Act 1901, allows for a concessional rate of customs duty on certain pumps (section 269C). This concession is applicable because, as of the application date, no substitutable goods were produced in Australia in the ordinary course of business (section 269P(3)). The specific provisions in section 269D and section 269E define the terms "goods produced in Australia" and "ordinary course of business" respectively, ensuring that the goods in question meet the eligibility criteria for the concession.
Parties or entities governed by this Act must adhere to the requirements set forth in the TCO. Specifically, they must ensure that the goods subject to the concession are those specified in the TCO and that they comply with the conditions for the concession, which includes the absence of substitutable goods produced in Australia (section 269SJ). The Chief Executive Officer of Customs (CEO) must be notified of any changes in production or use of goods that could affect the eligibility for the concession. Moreover, any person considering the concession should be aware of the need to apply for the TCO and follow the stipulated process.
Breaches of the provisions outlined in the TCO may lead to various consequences. For instance, if a party fails to comply with the conditions for the concession, they may be liable to pay the full rate of customs duty rather than the concessional rate. The Act does not specify particular criminal or civil penalties in this context but implies that non-compliance could lead to financial repercussions, such as paying the difference between the concessional and full rates of duty. Additionally, the CEO has the authority to investigate and take appropriate action against any non-compliance, which could include administrative penalties or further legal actions.