EXPLANATORY STATEMENT
Tariff Concession Instrument No.0502570
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.
Duncan’s Holdings Limited applied for a TCO in respect of certain timber processing plants on 24 February 2005.
Instrument
TCO No 0502570 was made on 6 May 2005. It declares that those certain timber processing plants 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 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. 0502570 is taken to have come into force on 24 February 2005.
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, established a framework for the administration of customs and excise, including the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can reduce the rate of customs duty on certain goods. The Tariff Concession Instrument No. 0502570, introduced in 2005, aimed to address the specific needs of industries by providing relief on customs duties for particular goods, in this case, certain timber processing plants, thereby facilitating trade and supporting Australian businesses. The policy objective behind this instrument was to ensure that Australian industries remain competitive by reducing the cost of importing essential machinery and equipment, while maintaining the fiscal integrity of the customs duty system.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to specific goods, granting them a reduced rate of customs duty as outlined in Schedule 4 to the Customs Tariff Act 1995. The Act applies to any person or entity that submits an application for a TCO concerning goods not specified in section 269SJ of the Customs Act 1901, which lists goods ineligible for such concessions. The CEO must assess whether the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, with the Commonwealth overseeing the application and approval process. The Act does not specify any exclusions, exemptions, or thresholds beyond those mentioned, and the CEO's decision can be influenced by subordinate instruments that further define terms such as 'substitutable goods' and 'ordinary course of business'.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0502570, under the Customs Act 1901, require the Chief Executive Officer of Customs (CEO) to make a written order, known as a Tariff Concession Order (TCO), for certain goods if the application meets the core criteria. Specifically, section 269C of the Act stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269F outlines the process for applying for a TCO, and section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, a TCO must be made. In this case, TCO No. 0502570 was made on 6 May 2005, declaring that certain timber processing plants are subject to a TCO, with a duty rate of 3% instead of the general rate of 5%.
The Act imposes several obligations on the parties involved in the TCO process. Under section 269K(1), the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission. In this instance, no submissions were received. Additionally, subsection 269S(1) specifies that a TCO is taken to have come into force on the day on which the application for the TCO was lodged, meaning TCO No. 0502570 is effective from 24 February 2005. The TCO also ensures that it does not affect the rights of any person, other than the Commonwealth, in a way that would disadvantage them or impose liabilities in respect of anything done or omitted before the date of registration.
The Act includes provisions for potential breaches and penalties, although the specific consequences for non-compliance are not detailed in the explanatory statement. Generally, under the Customs Act 1901, breaches of the Act and associated regulations can result in both civil and criminal penalties. Civil penalties may include fines, and in some cases, criminal penalties such as imprisonment may apply, depending on the severity and intent behind the breach. The exact penalties would be determined by the relevant sections of the Customs Act 1901 and any other applicable legislation, such as the Crimes Act 1914. It is essential for entities and individuals subject to the Act to ensure compliance to avoid these potential consequences.