EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603140
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.
Farmmark Pty Ltd applied for a TCO in respect of certain animal husbandry climate control on 1 February 2006.
Instrument
TCO No 0603140 was made on 7 April 2006. It declares that those certain animal husbandry climate control 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. 0603140 is taken to have come into force on 1 February 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, enacted by the Parliament of Australia, provides a framework for the administration of customs and excise duties. This legislation includes provisions for Tariff Concession Orders (TCOs) under Part XVA, which allow for the reduction or elimination of customs duties on specific goods under certain conditions. The primary issue this scheme addresses is the potential economic disadvantage faced by Australian importers when competing against domestically produced goods, by providing tariff relief where no suitable domestic alternatives exist. Tariff Concession Instrument No. 0603140 was introduced to provide a zero percent duty on certain animal husbandry climate control equipment starting from 1 February 2006, following an application by Farmmark Pty Ltd. The policy objective, as stated in the explanatory statement, is to ensure that importers are not disadvantaged when importing goods for which there is no substitutable Australian-produced equivalent, thereby promoting fair trade practices and supporting the competitive position of Australian importers in the market.
Scope and Application
The Tariff Concession Instrument No. 0603140, made under the Customs Act 1901, applies specifically to the goods identified in the instrument—certain animal husbandry climate control—and the entity that applied for the concession, Farmmark Pty Ltd. The application of this instrument is governed by the conditions set out in Part XVA of the Customs Act 1901, which allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. This instrument came into force on 1 February 2006, the date on which the application was lodged. The TCO applies a zero percent duty rate to the specified goods, down from the general rate of 5 percent, provided the application met the core criteria specified in the Act, namely that no substitutable goods were produced in Australia on the day the application was lodged. The instrument does not affect the rights of any person as at the date of registration to disadvantage them or impose any liabilities in respect of anything done or omitted to be done before the date of registration. Additionally, the TCO does not extend to the goods specified in section 269SJ of the Act, which are ineligible for tariff concessions.
Key Provisions
The Customs Act 1901 (the Act) establishes a scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) to reduce the customs duty on certain goods (sections 269F and 269P). An application for a TCO can be made by a person under section 269F, provided the goods are not specified in section 269SJ as ineligible for a TCO. The CEO must then determine whether the application meets the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business (section 269C). Definitions of key terms like 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269B, respectively. If the application meets these criteria, the CEO is required to issue a written TCO, specifying the reduced duty rate (subsection 269P(3)).
In this instance, Farmmark Pty Ltd applied for a TCO concerning certain animal husbandry climate control systems on 1 February 2006. TCO No. 0603140, issued on 7 April 2006, declared that these goods are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a 0% duty rate, down from the general rate of 5% (subsection 269P(3)). The CEO must publish a notice in the Gazette, inviting any interested parties to lodge submissions against the TCO (subsection 269K(1)). No submissions were received in response to this invitation, facilitating the issuance of the TCO.
The Act mandates that a TCO takes effect on the date the application is lodged (subsection 269S(1)), meaning TCO No. 0603140 is effective from 1 February 2006. Importantly, the TCO does not affect the rights of any person, other than the Commonwealth, in a way that disadvantages them or imposes liabilities for actions taken prior to the TCO’s registration (subsection 269S(4)). Importers will benefit from this TCO by being able to apply for a duty refund for goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).
Breaching the provisions of the Customs Act 1901 can lead to various civil and criminal penalties. Offences under the Act might include providing false or misleading information in an application for a TCO or attempting to import goods that are not eligible for a TCO. The penalties for such breaches can be severe, including fines and imprisonment. The specific penalties depend on the nature and severity of the offence, with maximum penalties varying according to the specific breach. For instance, providing false information can lead to fines of up to $22,000 for individuals and higher for corporations, alongside potential imprisonment terms. It is crucial for all parties involved to adhere to the requirements and obligations outlined in the Act to avoid these serious consequences.