EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0602850
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.
Phillip Morris Ltd applied for a TCO in respect of certain cigarette conveyors and buffers on 24 January 2006.
Instrument
TCO No 0602850 was made on 21 April 2006. It declares that those certain cigarette conveyors and buffers 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. 0602850 is taken to have come into force on 24 January 2006.
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 by the Parliament of Australia and establishes a framework for the administration of customs duties, including the ability for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs). These orders provide a lower rate of customs duty on specified goods, subject to certain criteria being met. The Tariff Concession Instrument No. 0602850 was introduced to address the specific application by Phillip Morris Ltd for tariff concessions on certain cigarette conveyors and buffers. The instrument was made on 21 April 2006, following an application lodged on 24 January 2006, and declares that these goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free rather than the general rate of 5%. The policy objective of this instrument was to facilitate the importation of these goods without the imposition of customs duty, provided the CEO was satisfied that no substitutable goods were produced in Australia at the time of application.
Scope and Application
The Customs Act 1901 provides a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities seeking a reduction in customs duty on specific goods by applying for a TCO, provided that the goods in question are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The CEO must consider applications under section 269C, ensuring that no substitutable goods are produced in Australia in the ordinary course of business at the time of the application. The scope of the Act extends to the Commonwealth level and affects industries involved in the importation of goods eligible for tariff concessions. The Act's application can be further extended or specified through subordinate instruments, although the primary legislation does not detail these explicitly. The TCOs themselves have a retroactive effect from the date of application lodgement, but they do not disadvantage or impose liabilities on any person other than the Commonwealth, thereby protecting the rights of importers and allowing them to seek duty refunds on imports made since the TCO's effective date.
Key Provisions
The Tariff Concession Instrument No. 0602850 under the Customs Act 1901 (section 269F) pertains to the application process for Tariff Concession Orders (TCOs). An application for a TCO can be made by any person to the Chief Executive Officer of Customs (CEO) provided it does not relate to goods specified in section 269SJ, which are ineligible for a TCO. If the CEO is satisfied that the application is valid and meets the core criteria as outlined in section 269C, the CEO is obligated to make a TCO. The core criteria require that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E.
The TCO imposes specific obligations on the parties it governs. The CEO must, upon receiving a valid TCO application, ensure that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the application meets the core criteria, the CEO must issue a written TCO specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. In this case, item 50 applies to certain cigarette conveyors and buffers, resulting in a duty rate of free, as opposed to the general rate of 5%. Additionally, as stipulated in subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions opposing the TCO.
Failing to comply with the provisions of the Customs Act 1901 can result in various consequences. The Act does not specify particular offences under the TCO mechanism itself, but breaches of the Customs Act may incur civil or criminal penalties. For example, knowingly making a false statement in a customs declaration can lead to penalties, including fines of up to $11,000 for individuals and $55,000 for corporations, or imprisonment for up to two years, or both. Additionally, non-compliance with any obligation imposed by the Customs Act may result in legal actions for breach of contract or other remedies available under Australian law.