EXPLANATORY STATEMENT
Tariff Concession Instrument No.0503785
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.
Joe White Maltings Pty Ltd applied for a TCO in respect of certain chute pipe spouting systems on 6 April 2005.
Instrument
TCO No 0503785 was made on 10 June 2005. It declares that those certain chute pipe spouting systems 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. 0503785 is taken to have come into force on 6 April 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 Tariff Concession Instrument No. 0503785, enacted in 2005, addresses the problem of applying tariff concessions to specific goods under the Customs Act 1901. This instrument was introduced to provide relief on customs duties for certain goods, in this case, chute pipe spouting systems, by granting a Tariff Concession Order (TCO) to Joe White Maltings Pty Ltd. The Customs Act 1901 allows the Chief Executive Officer of Customs to make such TCOs if certain conditions are met, including that no substitutable goods are produced in Australia. The policy objective here is to provide a mechanism for reducing customs duties on imported goods where there is no domestic production of substitutable goods, thereby encouraging trade and benefiting importers. The enactment of this TCO ensures that the chute pipe spouting systems are subject to a lower rate of duty, specifically free of charge, rather than the general rate of 5%.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to lower the customs duty on certain goods. Applications for TCOs can be made by any person, provided the goods are not excluded under section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO assesses applications based on core criteria, primarily ensuring that no substitutable goods are produced in Australia at the time of the application. Once the CEO determines that an application meets these criteria, they must issue a written TCO, effectively applying a lower rate of duty on the specified goods. The scope of the Act extends across the Commonwealth of Australia, governing the importation of goods and the application of customs duties, with specific instruments like TCO No. 0503785 illustrating its practical application. The TCO process also includes public consultation, allowing interested parties to submit objections, although in the case of TCO No. 0503785, no submissions were received. The commencement date of a TCO is the day the application is lodged, ensuring immediate effect from the application date.
Key Provisions
The Customs Act 1901 includes a scheme for Tariff Concession Orders (TCOs) under Part XVA. Section 269F allows any person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. For an application to be considered, it must not involve goods specified in section 269SJ, which are ineligible for TCOs. The CEO must determine whether the application meets the core criteria set out in section 269C, which require that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively.
The obligations under this Act for the parties involved are quite clear. The CEO is required to review each application to ensure it aligns with the eligibility criteria. For applicants, the obligation is to provide all necessary information to substantiate the claim that substitutable goods are not produced in Australia. The CEO must publish a notice in the Gazette inviting any person who believes the TCO should not be granted to submit their reasons, as per section 269K(1). In the case of Joe White Maltings Pty Ltd, the CEO was satisfied that the application met the criteria, and thus a TCO was issued on 10 June 2005. This TCO specified that the certain chute pipe spouting systems would be subject to a zero rate of duty, down from the general rate of 5%.
Failure to comply with the requirements of the Customs Act 1901 may lead to various legal consequences. Under section 269S(1), a TCO is deemed to come into force on the day the application was lodged. However, the Act does not disadvantage any person (other than the Commonwealth) or impose liabilities for actions taken before the registration date. Importers can benefit from this by applying for a refund of duties paid on goods imported since the TCO's effective date. There are no imposed liabilities on any person due to the issuance of a TCO. In the event of non-compliance or fraudulent applications, the Act could lead to civil or criminal penalties, although specific penalties are not detailed in the explanatory statement provided.