EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0411938
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 sealing machines on 10 November 2004.
Instrument
TCO No 0411938 was made on 14 November 2004. It declares that certain composite can sealing 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. 0411938 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, enacted by the Parliament of Australia, established a framework for the imposition of customs duty on imported goods, with the Customs Act serving as the primary legislative vehicle for this purpose. Among its provisions, the Act allows for the creation of Tariff Concession Orders (TCOs), which provide lower rates of customs duty on certain goods, as outlined in Part XVA. This was introduced to address the need for a flexible mechanism that could respond to specific economic circumstances and the competitive landscape, ensuring that Australian businesses could operate more efficiently by reducing the cost of importing particular goods. The process involves an application to the Chief Executive Officer of Customs, who must determine if the application meets the core criteria set out in the Act, such as the absence of substitutable goods being produced in Australia. The policy objective is to facilitate the importation of goods that are not domestically produced, thereby supporting industry competitiveness and potentially lowering costs for consumers.
Scope and Application
The Customs Act 1901, as amended by Tariff Concession Instrument No. 0411938, applies to any entity or person seeking to import specific goods into Australia, namely composite can sealing machines, subject to tariff concession orders. The Act operates within the Commonwealth jurisdiction, impacting all states and territories of Australia. This legislation allows for the application of a lower rate of customs duty to goods that are subject to a Tariff Concession Order (TCO) if certain criteria are met, such as the absence of substitutable goods produced in Australia. The process of applying for and granting a TCO is overseen by the Chief Executive Officer of Customs, who must ensure that the application aligns with the core criteria set out in the Act, specifically that no substitutable goods are produced in Australia at the time of application. This instrument directly benefits importers by potentially reducing the customs duty rate from the general rate of 5% to a concessional rate of 3%, as applied to the specific composite can sealing machines. The Act does not impose any liabilities on individuals or entities other than the Commonwealth, and it does not affect the rights of any person regarding transactions before the TCO's effective date.
Key Provisions
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) via the Chief Executive Officer of Customs (CEO) under section 269F. This legislation allows for lower customs duties on goods specified in a TCO. To qualify for a TCO, the applicant must ensure that the goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. Once the CEO determines that the application does not fall under this exclusion, they must assess whether it meets the core criteria outlined in section 269C. This involves confirming that, on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E.
The Act imposes several obligations on the CEO and applicants. Upon receiving a valid TCO application, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections or reasons why the TCO should not proceed (subsection 269K(1)). This ensures transparency and provides a forum for stakeholders to voice their concerns. Additionally, the CEO is mandated to make a written order if satisfied that the application meets the core criteria, as per subsection 269P(3). This order specifies the lower rate of duty applicable to the goods in question.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations can result in various penalties. While the explanatory statement does not explicitly detail the penalties, breaches of customs laws generally carry both civil and criminal consequences. Civil penalties can include fines and the forfeiture of goods, while criminal penalties may involve imprisonment and fines, depending on the severity of the breach. The maximum penalties can vary widely, depending on the specific provisions of the Act and any relevant regulations.
In the case of TCO No. 0411938, the CEO determined that the application met the core criteria and issued the order on 14 November 2004. This TCO specifies that certain composite can sealing machines are subject to a duty rate of 3% instead of the general rate of 5%. This order came into effect on 10 November 2004, the date the application was lodged, and does not affect the rights of any person as at the date of registration, thereby ensuring no existing liabilities are imposed. Importers of these goods can apply for duty refunds on imports made since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.
The explanatory statement does not detail any submissions or objections received in response to the initial notice published by the CEO. This lack of feedback suggests that the decision to issue TCO No. 0411938 was largely unopposed, reinforcing the legitimacy and necessity of the tariff concession. The transparent process, as mandated by the Act, ensures that all stakeholders have the opportunity to voice their concerns, contributing to a fair and balanced application of the legislation.