EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618154
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.
Breville Pty Ltd applied for a TCO in respect of certain pancake makers on 2 November 2006.
Instrument
TCO No 0618154 was made on 19 January 2007. It declares that those certain pancake makers 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. 0618154 is taken to have come into force on 2 November 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 under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act aims to address the gap in ensuring that Australian businesses can import certain goods at a lower rate of customs duty, provided that these goods are not produced in Australia and there are no substitutable goods available domestically. The policy objective is to facilitate trade and support Australian businesses by reducing the cost of importing necessary goods. In line with this objective, Breville Pty Ltd successfully applied for a TCO for certain pancake makers, which resulted in the zero per cent duty rate for these goods, down from the general rate of five per cent. The instrument, TCO No. 0618154, was made on 19 January 2007 and took effect from 2 November 2006. This measure ensures that importers of these goods are not disadvantaged and can even apply for a refund of duty paid on imports before the TCO came into effect.
Scope and Application
The Tariff Concession Instrument No. 0618154 under the Customs Act 1901 applies to entities or individuals who have applied for and received tariff concession orders (TCO) for specific goods. The legislation allows for the concession of customs duty on goods not produced in Australia, provided that the application meets the core criteria outlined in the Act. Specifically, the CEO of Customs must determine that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. In this case, the TCO No. 0618154 applies to certain pancake makers, reducing the duty rate from 5% to 0% once the CEO was satisfied that no substitutable goods were produced in Australia. The geographic reach of this Act is national, applying to all importers and entities within Australia. The Act does not specify any exclusions or exemptions, though it does note that the rights of importers will be beneficially affected by the TCO. The instrument does not impose any liabilities on any person, including those done or omitted before the date of registration of the TCO.
Key Provisions
The key operative sections of the legislation, specifically the Customs Act 1901, establish the framework for the creation and application of Tariff Concession Orders (TCOs). Section 269F allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a TCO in relation to specific goods (section 269F(1)). The CEO is required to consider the application and determine if it complies with the core criteria specified in section 269C. If the CEO is satisfied that the application meets these criteria, they must issue a written order, known as a TCO, which specifies that the goods in question are subject to a prescribed rate of duty (section 269P(3)). In this instance, TCO No. 0618154 specifies that certain pancake makers are subject to a 0% rate of duty, as opposed to the general rate of 5% (section 269P(3)).
The Act imposes certain obligations on the entities it governs. Most notably, section 269K(1) mandates that the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections or concerns about the proposed TCO. This transparency measure ensures that all stakeholders have an opportunity to voice their opinions before the TCO is finalised. Additionally, section 269S(1) stipulates that the TCO is effective from the date the application is lodged, which in this case is 2 November 2006 (subsection 269S(1)). This provision ensures that the tariff concessions apply retroactively from the date of application, benefiting importers who have already imported the goods in question.
The Customs Act 1901 also outlines potential consequences for non-compliance with its provisions. While the explanatory statement does not detail specific offences or penalties related to the issuance or application of TCOs, breaches of the Customs Act more broadly can result in both civil and criminal penalties. Under section 223 of the Act, individuals or entities found guilty of an offence can be subject to fines and imprisonment. The severity of these penalties varies depending on the nature and extent of the breach, with more serious offences potentially attracting higher fines and longer prison sentences. Furthermore, the Act provides for the imposition of financial penalties for incorrect or fraudulent declarations, which can be significant, especially in commercial contexts.
In summary, the Customs Act 1901 provides a structured approach to the application and issuance of TCOs, ensuring that the process is transparent and fair. The Act imposes specific obligations on the CEO of Customs to consider applications and consult with interested parties. Failure to comply with the Act’s provisions can lead to serious consequences, including fines and imprisonment, underscoring the importance of adhering to the regulatory framework.