EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0411937
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.
Sonoco Composite Cans applied for a TCO in respect of certain composite can flanging machines on 10 November 2004.
Instrument
TCO No 0411937 was made on 14 January 2005. It declares that certain composite can flanging machines 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 3%.
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 initiation.
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. 0411937 is taken to have come into force on 10 November 2004.
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 to provide a comprehensive framework for the regulation of customs and excise in Australia, including the administration of tariffs and the imposition of duties on imported goods. The introduction of Tariff Concession Orders (TCOs) under Part XVA of the Act addresses the need to provide targeted relief for certain goods, ensuring that Australian businesses can access necessary equipment and materials at reduced duty rates where no suitable domestic alternatives exist. Enacted by the Australian Parliament, the primary policy objective of this legislation is to support domestic industries by allowing the Chief Executive Officer of Customs to grant tariff concessions that lower the duty on specified imported goods, provided no substitutable goods are produced in Australia. This mechanism aims to enhance the competitiveness of Australian businesses by reducing their costs, thereby fostering economic growth and efficiency within the sector.
The process for applying for and granting a TCO involves a rigorous assessment to ensure that the concessions are justified and do not undermine local production. The Explanatory Statement for Tariff Concession Instrument No. 0411937 illustrates this process, detailing how Sonoco Composite Cans successfully applied for a TCO for composite can flanging machines, resulting in a reduced duty rate from 5% to 3%. This case demonstrates the practical application of the Act's provisions, highlighting the importance of ensuring that such concessions are fairly and transparently administered to benefit the intended recipients without causing undue harm to other stakeholders.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the application of tariff concession orders (TCOs) that can reduce the customs duty on specific goods. These orders are issued by the Chief Executive Officer of Customs (CEO) upon application, provided the goods are not restricted by section 269SJ and meet the criteria outlined in section 269C. A TCO application is valid if no substitutable goods are produced in Australia at the time of application, as per section 269P(3). The application process requires the CEO to publish a notice in the Gazette, inviting submissions from any interested parties; however, in the case of TCO No. 0411937, no submissions were received. The TCO is effective from the date the application was lodged, as per subsection 269S(1), and benefits importers by potentially allowing them to apply for a refund of duty paid on goods imported since the TCO's effective date, as stipulated in paragraph 126(1)(r) of the Regulations. It is noteworthy that the TCO does not disadvantage any person or impose new liabilities on anyone.
Key Provisions
The Tariff Concession Instrument No. 0411937, under the Customs Act 1901, pertains to a tariff concession order (TCO) for certain composite can flanging machines. The CEO of Customs is mandated by section 269F to consider applications for TCOs. If the application complies with the core criteria outlined in section 269C, the CEO is required to make a written TCO. Section 269P(3) specifies that the TCO must declare the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. For these particular machines, item 50 applies, resulting in a duty rate of 3% instead of the general rate of 5%.
The obligations imposed by the Act on parties include ensuring that the goods in question do not have substitutable alternatives produced in Australia. As per section 269C, the application for a TCO must demonstrate that no such substitutable goods are produced domestically in the ordinary course of business. Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be granted. In this instance, no submissions were received.
The Act also delineates the consequences of non-compliance. While specific offences or penalties related to TCOs are not explicitly detailed in the text provided, breaches of the Customs Act 1901 can generally result in substantial penalties. For example, under section 238 of the Customs Act, penalties for offences related to customs duty evasion can include fines of up to 10,000 penalty units or imprisonment for up to ten years, or both. Furthermore, section 269Q provides that the making of a false statement in an application for a TCO can incur penalties of up to 10,000 penalty units or imprisonment for up to five years, or both. These penalties underscore the importance of compliance with the statutory requirements outlined in the Act.