EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606249
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.
Swanshell China Pty Ltd applied for a TCO in respect of certain sugar cane bins on 6 April 2006.
Instrument
TCO No 0606249 was made on 30 June 2006. It declares that those certain sugar cane bins 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. 0606249 is taken to have come into force on 6 April 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 Australian Parliament, provides a framework for tariff concession orders (TCOs) that apply reduced rates of customs duty to specific goods. The intent behind this legislative mechanism is to facilitate the import of goods that are not produced in Australia, thereby supporting trade and potentially reducing costs for importers and consumers. The explanatory statement for Tariff Concession Instrument No. 0606249, issued on 30 June 2006, illustrates the application of this framework in practice. Swanshell China Pty Ltd applied for a tariff concession in respect of certain sugar cane bins, which was approved as no substitutable goods were being produced in Australia. The concession resulted in these bins being subject to a zero rate of duty, down from the general rate of 5%. The process involved consultation with interested parties, although no objections were received. The tariff concession was deemed to have come into force on the date the application was lodged, and it was designed not to disadvantage any existing rights or impose new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0606249, made under the Customs Act 1901, applies to the importation of certain sugar cane bins and pertains to the application of a lower rate of customs duty as specified in the order. The act applies to any person or entity seeking a tariff concession order (TCO) for goods not produced in Australia in the ordinary course of business, ensuring that no substitutable goods are being manufactured domestically. This act operates within the Commonwealth jurisdiction and impacts the import duties of those importing the specified sugar cane bins. The exclusions under section 269SJ of the Act ensure that certain goods, such as those that can be specified in that section, are not eligible for a TCO. The instrument extends the application of the Customs Act through the establishment of specific conditions under which the tariff concession is granted. The instrument, having come into force on the date the application was lodged, does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, while providing beneficial rights to importers who can apply for a refund of duties on the specified goods imported after the effective date of the TCO.
Key Provisions
The main operative sections of the Customs Act 1901, as referenced in Tariff Concession Instrument No. 0606249, are sections 269C, 269B, 269E, 269F, 269P, 269S, and 269SJ. These sections (269C, 269B, 269E, 269F, 269P, 269S, 269SJ) set out the criteria and process for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Specifically, section 269F allows for the application for a TCO, while section 269C mandates that the CEO must make a TCO if no substitutable goods are produced in Australia on the day the application is lodged. The definitions provided in sections 269B and 269E are crucial for determining what constitutes "goods produced in Australia" and "ordinary course of business" respectively, which are key to meeting the core criteria for a TCO. Under section 269P, if the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods in question are subject to a prescribed tariff item, effectively granting a tariff concession.
The Customs Act 1901 imposes several obligations and requirements on parties and entities governed by the Act. Firstly, the CEO is obligated to review and assess any TCO applications to determine if they meet the core criteria outlined in section 269C. This involves verifying that no substitutable goods are being produced in Australia. Furthermore, the CEO must publish a notice in the Gazette (subsection 269K(1)) inviting any interested parties to lodge submissions if they believe the TCO should not proceed. This transparency measure ensures that all relevant concerns are considered before a TCO is made. The Act also requires that any TCO must specify the prescribed tariff item applicable to the goods in question, as outlined in section 269P(3). Additionally, the Act mandates that TCOs do not affect the rights of any person, other than the Commonwealth, as at the date of registration in a manner that would disadvantage that person or impose liabilities (subsection 269S(1)).
Offences and penalties under the Customs Act 1901 related to the breach of TCO provisions can result in both civil and criminal consequences. For instance, section 269O of the Act stipulates that knowingly making a false or misleading statement in an application for a TCO is an offence. Penalties for such offences can include substantial fines, as outlined in section 269X, which provides for penalties of up to 10,000 penalty units for individuals and 50,000 penalty units for bodies corporate, depending on the severity of the offence. Additionally, any misuse of TCO benefits, such as claiming a tariff concession on goods that do not qualify, could lead to further penalties under the Customs Act, including possible imprisonment. These severe penalties underscore the importance of adhering to the provisions and obligations set out in the Act.
In summary, the Customs Act 1901, through Tariff Concession Instrument No. 0606249, establishes a clear process for applying for and granting tariff concessions on specific goods. The CEO is responsible for assessing applications and ensuring they meet the criteria, while also providing a mechanism for public submissions. The Act ensures that the rights of third parties are not adversely affected and imposes significant penalties for non-compliance, reinforcing the importance of adhering to its provisions.