EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619469
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.
SPC Ardmona Operations Ltd applied for a TCO in respect of certain fruit and vegetable sorters on 7 December 2006.
Instrument
TCO No 0619469 was made on 2 March 2007. It declares that those certain fruit and vegetable sorters 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. 0619469 is taken to have come into force on 7 December 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, facilitates the reduction of customs duties on certain imported goods through Tariff Concession Orders (TCOs). This legislative framework was introduced to address the need for economic flexibility and support for industries that lack local production alternatives. The Customs Act 1901 allows for the CEO of Customs to reduce or eliminate customs duties on imported goods if it is determined that no substitutable goods are produced in Australia. The primary objective is to foster fair competition and economic efficiency by ensuring that Australian industries remain competitive without undue protectionism. In this context, TCO No. 0619469, made on 2 March 2007, granted a zero percent duty rate on specific fruit and vegetable sorters, benefiting SPC Ardmona Operations Ltd, and was implemented retroactively from 7 December 2006, without imposing any liabilities on parties prior to the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 0619469, made under the Customs Act 1901, applies to entities or individuals seeking tariff concessions for specific goods imported into Australia. This instrument was issued in response to an application by SPC Ardmona Operations Ltd for certain fruit and vegetable sorters, where the Chief Executive Officer of Customs (CEO) determined that no substitutable goods were produced in Australia in the ordinary course of business, thus meeting the core criteria for a tariff concession order (TCO). The instrument declares that these particular fruit and vegetable sorters are subject to a zero percent customs duty rate, as opposed to the general rate of 5 percent, and is effective from the date the application was lodged, 7 December 2006. This concession does not impose any liabilities on persons other than the Commonwealth and does not affect any rights as at the date of registration, though it does provide beneficial rights to importers who may apply for a refund of duty paid on the goods since the effective date.
Key Provisions
The primary operative sections of the Customs Act 1901 as it relates to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269S. Section 269F enables a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods. The CEO must then determine if the application meets the core criteria set out in section 269C. If the criteria are met, the CEO is required to make a written order under section 269P, declaring the goods subject to the TCO. Section 269S outlines the commencement date of the TCO, which is generally the date on which the application was lodged. This particular TCO, No. 0619469, made on 2 March 2007, applies to certain fruit and vegetable sorters and declares them to be subject to a 0% duty rate, instead of the general 5% duty rate.
The Customs Act 1901 imposes several obligations on the parties involved with TCOs. Firstly, applicants for a TCO, such as SPC Ardmona Operations Ltd, must ensure that their application meets the core criteria, particularly that no substitutable goods are produced in Australia in the ordinary course of business. Secondly, the CEO of Customs must review the application, determine if it meets the criteria, and make a written order if it does. The CEO is also obligated to publish a notice in the Gazette inviting any interested parties to lodge a submission against the TCO if they believe it should not proceed. In this case, the CEO did not receive any submissions. Additionally, the CEO must ensure that the rights of importers are beneficially affected and that no existing liabilities are imposed on any person by the TCO.
Breaches of the Customs Act 1901 or failure to comply with the provisions regarding TCOs can result in civil and criminal consequences. While the explanatory statement does not detail specific offences or penalties for breaches related to TCOs, general provisions within the Act may apply. Penalties for breaches of customs laws can include fines and imprisonment. For example, section 264 of the Act provides that a person who contravenes a provision of the Act or Regulations may be fined up to 10,000 penalty units or imprisoned for up to five years, or both, for a strict liability offence. Additionally, section 265 provides for fines and imprisonment for more serious offences such as fraudulent or knowingly false statements. These penalties reflect the seriousness with which the Australian Government treats compliance with customs laws.