EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139723
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.
Klambon Water Australia Pty Ltd applied for a TCO in respect of certain valves on 30 November 2011.
Instrument
TCO No 1139723 was made on 15 February 2012. It declares that those certain valves 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. 1139723 is taken to have come into force on 30 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 within which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs). The objective of this scheme, as outlined in Part XVA of the Act, is to allow for the application of a lower rate of customs duty on specific goods, provided they meet certain criteria. This legislation was introduced to address the gap in providing tariff relief to importers for certain goods that are not produced domestically and do not have a suitable substitute available in Australia. Tariff Concession Instrument No. 1139723, made under this Act, exemplifies the process by which the CEO assesses an application and, upon meeting the core criteria, issues a TCO to benefit the importers of the specified goods. The process ensures that no party, other than the Commonwealth, is disadvantaged or imposed with additional liabilities due to the issuance of a TCO.
Scope and Application
The Tariff Concession Instrument No. 1139723 under the Customs Act 1901 applies specifically to the goods identified in the instrument, namely certain valves for which Klambon Water Australia Pty Ltd applied for tariff concessions on 30 November 2011. The instrument was made on 15 February 2012 and declares that these valves are subject to a reduced rate of customs duty, namely free, as opposed to the general rate of 5%, upon satisfying the core criteria outlined in section 269C of the Act. The application process involves an assessment by the Chief Executive Officer of Customs to determine if no substitutable goods were produced in Australia at the time of application, a requirement stipulated by section 269C. The instrument's jurisdiction is national, as it operates under the Commonwealth's legislative power, and it does not disadvantage any person by affecting rights as at the date of registration, nor does it impose liabilities on any person other than the Commonwealth. Importantly, the instrument does not extend to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The instrument's scope is further defined by subordinate instruments as necessary, ensuring compliance with the Customs Act 1901.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1139723 under the Customs Act 1901 (section 269P(3)) involve the creation of a Tariff Concession Order (TCO) for specific valves. These valves are granted a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, which otherwise carries a general rate of duty of 5%. Section 269C outlines the core criteria that must be met for a TCO application to be considered, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Section 269B defines key terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods', ensuring clarity in the application process. The instrument was made on 15 February 2012, declaring that the valves in question are subject to the specified tariff concession due to the absence of substitutable goods produced domestically.
The obligations imposed by this Act on the parties and entities it governs primarily involve the application and assessment process for a TCO. The Chief Executive Officer of Customs (CEO) must ensure that any application for a TCO is not in respect of goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. If the application meets the core criteria, the CEO is mandated to make a written order declaring the goods subject to the tariff concession. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties regarding the application. In this case, no submissions were received. The TCO itself ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO, which is the date the application was lodged.
In terms of consequences for breach, the Act does not explicitly detail offences or penalties for failing to comply with the requirements of a TCO. However, any failure to adhere to the conditions set out in the TCO, such as incorrect application of the tariff concession, could potentially lead to civil or administrative actions under other provisions of the Customs Act 1901. For instance, incorrect declarations or fraudulent activities related to customs duty could result in fines, penalties, or other legal repercussions as prescribed by the broader customs legislation. The absence of substitutable goods in Australia is a critical condition for the validity of the TCO, and non-compliance with this could similarly lead to legal consequences under the Act.