EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0506577
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.
Inghams Enterprises Pty Ltd applied for a TCO in respect of certain Hatchery Automation Line Parts on 1 June 2005.
Instrument
TCO No 0506577 was made on 21 October 2005. It declares that those certain Hatchery Automation Line Parts 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 0%.
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. 0506577 is taken to have come into force on 1June 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, outlines provisions for the imposition of customs duties on goods imported into Australia. One of the key mechanisms within this Act is the scheme for Tariff Concession Orders (TCOs), which allows for the reduction or elimination of customs duties on specified goods. This scheme was introduced to address the need for flexibility in tariff applications to support industries and businesses that rely on the importation of specific goods for their operations. Instrument No. 0506577, made under this scheme, exemplifies the process whereby the Chief Executive Officer of Customs grants a concession, reducing the duty on certain Hatchery Automation Line Parts from 5% to 0%. This instrument was introduced following an application by Inghams Enterprises Pty Ltd, and after considering the criteria set out in the Customs Act, the CEO determined that no substitutable goods were produced in Australia, thus meeting the core criteria for a TCO. The legislative intent behind this concession is to provide economic relief to businesses by reducing their import costs, thereby enhancing their competitiveness and operational efficiency.
Scope and Application
The Customs Act 1901, through its Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) which apply reduced customs duties to certain goods. This legislation applies to any person or entity seeking to import goods that meet the specified criteria for tariff concessions, ensuring that these entities benefit from reduced duty rates on qualifying goods. The geographic reach of this Act extends across Australia as it pertains to the importation of goods into the country. However, the Act excludes certain goods from tariff concessions as listed in section 269SJ, such as those that are sensitive or produced domestically in sufficient quantities. The application of the Act can be further detailed or refined through subordinate instruments, such as the Customs Tariff Act 1995, which provides specific duty rates and classifications for imported goods. For instance, Tariff Concession Instrument No. 0506577 specifically reduced the duty rate on certain Hatchery Automation Line Parts from 5% to 0% after determining that no substitutable goods were produced in Australia. This order came into effect on the date the application was lodged, 1 June 2005, without retroactive application to transactions prior to that date, ensuring fairness to all parties involved.
Key Provisions
The primary operative sections of the Customs Act 1901 in relation to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO. If the application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged (section 269C), the CEO must make a TCO. This TCO would declare that the goods in question are subject to a lower rate of customs duty as specified in the order (section 269P(3)). Section 269SJ specifies goods that cannot be subject to a TCO, while sections 269B, 269D, and 269E define the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' respectively.
The Customs Act 1901 imposes several obligations on parties involved in the process of applying for and issuing a TCO. Firstly, the CEO must ensure that an application for a TCO is not in respect of goods specified in section 269SJ. Secondly, upon receiving a valid application, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). The CEO must consider any submissions received before deciding whether to issue the TCO. Additionally, the Act mandates that the TCO must not disadvantage any person or impose liabilities on any person in respect of anything done or omitted to be done before the TCO's registration date (subsection 269S(1)).
Breaches of the Customs Act 1901 can lead to various civil and criminal consequences. While the explanatory statement does not explicitly outline specific offences or penalties related to TCOs, general provisions within the Customs Act might apply. For instance, section 269T of the Act provides that a person who knowingly makes a false or misleading statement in an application for a TCO can be subject to a penalty. The penalty for a corporation is up to 10,000 penalty units, while the penalty for an individual is up to 1,000 penalty units. Additionally, if a person contravenes any provision of the Act or Regulations, they may face criminal prosecution, which could result in fines and imprisonment. The exact penalties would depend on the specific provision breached and the circumstances of the breach.