EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618983
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.
The Smiths Snackfood Company Ltd applied for a TCO in respect of certain potato crisp manufacturing lines on 27 November 2006.
Instrument
TCO No 0618983 was made on 02 March 2007. It declares that those certain potato crisp manufacturing lines 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. 0618983 is taken to have come into force on 27 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 to facilitate the administration of customs duties and to provide a framework for tariff concession orders. This legislation allows for the reduction or elimination of customs duty on certain imported goods, provided that they meet specific criteria. The Tariff Concession Order No. 0618983, made under the Act on 2 March 2007, exemplifies this by granting a tariff concession to The Smiths Snackfood Company Ltd for certain potato crisp manufacturing lines, effectively reducing the duty rate from 5% to free. This concession was granted as no substitutable goods were being produced in Australia at the time of the application, aligning with the core criteria outlined in the Act. The policy objective of such concessions is to support Australian businesses by ensuring they do not face unfair competition from domestically produced goods, while also potentially lowering costs for consumers.
Scope and Application
The Customs Act 1901, under Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that apply reduced rates of customs duty to specific goods. The Act applies to any individual or entity seeking to import goods into Australia and who may apply for a TCO if certain conditions are met. Notably, the application must pertain to goods not specified in section 269SJ, which excludes certain goods from TCO consideration. The scope of the Act encompasses the entire Commonwealth of Australia, and its application extends to all industries and transactions involving the importation of goods subject to customs duty. The Act includes provisions for the CEO to consider applications and make decisions based on whether the goods in question are substitutable by Australian-produced goods, as defined by sections 269D and 269E. The instrument in question, TCO No. 0618983, specifically addresses potato crisp manufacturing lines, granting them duty-free status upon meeting the core criteria outlined in the Act. The application of the TCO is effective from the date the application was lodged, 27 November 2006, and does not retroactively affect any pre-existing rights or impose liabilities on individuals or entities for actions taken before the order's registration.
Key Provisions
The primary operative sections of the Customs Act 1901 relevant to this Tariff Concession Order (TCO) include section 269F (subsections 269C and 269P(3)), which allows for the application and subsequent granting of a TCO by the Chief Executive Officer of Customs (CEO). If an application is made under section 269F and is not disqualified under section 269SJ, the CEO must then determine if the application meets the core criteria set out in section 269C. This involves confirming that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in section 269D (goods produced in Australia) and section 269E (ordinary course of business). If the CEO is satisfied that these criteria are met, a written order (TCO) is issued under section 269P(3), declaring the goods subject to the application are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
Under the Customs Act 1901, the CEO has a series of obligations when processing a TCO application. Firstly, upon receiving a valid application, the CEO must publish a notice in the Gazette, inviting any interested parties to submit objections to the making of the TCO, as required by subsection 269K(1). Following this, the CEO must consider any submissions received and determine whether the application meets the core criteria. If the criteria are met, the CEO is mandated to issue a TCO. Additionally, the CEO must ensure that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration, so as to disadvantage that person or impose liabilities on a person for actions taken before the date of registration. In the case of TCO No. 0618983, the CEO did not receive any submissions and subsequently issued the TCO as no substitutable goods were produced in Australia.
The Customs Act 1901 provides for certain consequences for breaches related to the TCO process. If a party fails to comply with the requirements set out in the Act, including providing false information in an application or acting in a manner that contravenes the provisions of a TCO, they may face penalties. Under the Act, offences can result in both civil and criminal consequences. Civil penalties may include fines, while criminal penalties can lead to imprisonment, with the specific penalties varying depending on the severity of the breach. The Act does not specify maximum penalties for breaches related to TCOs, but general penalties for offences under the Customs Act 1901 can include fines up to $22,000 for individuals and $110,000 for bodies corporate, along with potential imprisonment terms.