EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617068
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.
Moffat Pty Ltd applied for a TCO in respect of certain bun divider rounders on 11 September 2006.
Instrument
TCO No 0617068 was made on 1 December 2006. It declares that those certain bun divider rounders 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. 0617068 is taken to have come into force on 11 September 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 to provide a framework for the regulation of goods imported into Australia, including the imposition and collection of customs duty. The Act was introduced to address the need for a comprehensive legislative scheme governing customs and border protection, ensuring that the importation of goods is managed effectively to protect national interests and revenue. Part XVA of the Customs Act 1901 facilitates the granting of tariff concession orders (TCOs) by the Chief Executive Officer of Customs, enabling the reduction or exemption of customs duty on certain goods under specific conditions. The policy objective is to support Australian industries by lowering the cost of imported goods that do not have local alternatives, thereby enhancing competitiveness and economic efficiency. The Tariff Concession Instrument No. 0617068, made under the authority of the Act, specifically addresses an application from Moffat Pty Ltd for a TCO concerning bun divider rounders, effectively reducing the duty rate from 5% to 0% as no substitutable goods were produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 0617068, made under the Customs Act 1901, applies to the goods known as bun divider rounders, as specified in the Instrument. The Act allows for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that provide for lower rates of customs duty on certain goods, provided the goods are not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The scope of this Instrument is limited to ensuring that no substitutable goods are produced in Australia at the time the application for the TCO was lodged. The Instrument's geographic reach is national, as it pertains to the importation of goods into Australia and the application of the Customs Act 1901 across the Commonwealth. The Instrument does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person, only offering benefits to importers who may apply for a refund of duty on goods imported since the effective date of the TCO. This Instrument does not extend or restrict application through subordinate instruments but operates within the parameters set by the Customs Act 1901.
Key Provisions
Section 269F of the Customs Act 1901 provides the mechanism for a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). Once an application is lodged, the CEO must assess whether it meets the core criteria outlined in section 269C. If the application is deemed to meet these criteria, the CEO is obligated to issue a TCO, as per section 269P(3), which effectively reduces the customs duty rate for the specified goods. For instance, in TCO No. 0617068, the CEO determined that no substitutable goods were produced in Australia for certain bun divider rounders, leading to the application of a 0% duty rate instead of the general 5% rate. This decision was made under the authority conferred by the Customs Tariff Act 1995.
The obligations imposed by the Customs Act 1901 on the parties involved in the TCO process include the requirement for the CEO to evaluate each application against the core criteria and to publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not be granted. The CEO is also required to consider any submissions received and make a reasoned decision. In the case of TCO No. 0617068, the CEO published the notice on the acceptance of the application but did not receive any submissions opposing the concession.
In terms of consequences for breaches of the Act, section 269M provides that any person who knowingly makes a false or misleading statement in an application for a TCO may be subject to a penalty of up to 10,000 penalty units, which translates to significant monetary fines. Additionally, section 269N stipulates that any person who knowingly contravenes the Act in relation to a TCO may be liable for a penalty of up to 1,100 penalty units. These penalties serve as deterrents against fraudulent applications and misuse of the tariff concession scheme.
The Customs Act 1901 also sets out the commencement date for TCOs, which is the date on which the application for the TCO was lodged, as per section 269S(1). This means that TCO No. 0617068 was effective from 11 September 2006. Importantly, the Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, as outlined in section 269R. For importers, this means they can apply for a refund of duty paid on goods imported since the TCO's effective date, as permitted under paragraph 126(1)(r) of the Regulations.