EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702560
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 Limited applied for a TCO in respect of certain rotary rack bakery ovens on 19 February 2007.
Instrument
TCO No 0702560 was made on 11 May 2007. It declares that those certain rotary rack bakery ovens 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. 0702560 is taken to have come into force on 19 February 2007.
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 amended to include the Tariff Concession Orders scheme, providing a mechanism for the Chief Executive Officer of Customs to reduce customs duty on specific goods, thereby addressing the gap in tariff concessions for particular imported products. The instrument, Tariff Concession Instrument No. 0702560, was introduced on 11 May 2007 by the Commonwealth of Australia under the authority of the Customs Act 1901. This particular instrument was enacted to provide tariff concessions for certain rotary rack bakery ovens, ensuring that no substitutable goods were produced in Australia at the time of the application. The primary objective was to benefit importers by potentially allowing them to claim refunds on duty paid on these goods imported since the date the tariff concession order was deemed to come into force, without imposing any liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the framework for Tariff Concession Orders (TCOs), which are intended to provide tariff concessions on certain goods. These orders can be applied for by any person, and upon application, the Chief Executive Officer of Customs (CEO) assesses whether the application meets the core criteria, which include the absence of substitutable goods produced in Australia in the ordinary course of business. Upon satisfaction that the application meets these criteria, the CEO must make a written TCO that declares the specified goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. This particular legislation applies to the importation of certain rotary rack bakery ovens for which Moffat Pty Limited applied for a tariff concession, resulting in Instrument TCO No. 0702560 that applies a duty rate of free instead of the general rate of 5%. The TCO has a retroactive effect, being taken to have come into force on the day the application was lodged, thereby benefiting the rights of importers who can now apply for a refund of duty on goods imported since that date. Importantly, the TCO does not disadvantage any person or impose liabilities in respect of actions taken before its registration.
Key Provisions
The Tariff Concession Instrument No. 0702560 under the Customs Act 1901 (section 269P(3)) allows for a reduction in customs duty for certain goods, specifically rotary rack bakery ovens in this case. The main operative sections of this legislation require that an application for a Tariff Concession Order (TCO) be submitted to the Chief Executive Officer of Customs (CEO) (section 269F). The CEO must determine whether the application meets the core criteria, which include verifying that no substitutable goods are produced in Australia in the ordinary course of business (sections 269C, 269D, 269E). If these criteria are satisfied, the CEO must issue a TCO, specifying the reduced duty rate (section 269P(3)).
The obligations imposed by the Act on the parties it governs include ensuring that any application for a TCO adheres to the criteria outlined in section 269C, specifically that no substitutable goods are produced in Australia. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)). The CEO’s decision must be made in accordance with the provisions of the Customs Act and the Customs Tariff Act 1995. Importers must also ensure compliance with the terms of the TCO when importing the specified goods.
The Act includes provisions for offences and penalties for breaches of its terms. However, the explanatory statement does not specify the exact offences, penalties, or consequences for non-compliance in this particular context. Typically, breaches of customs legislation can lead to significant penalties, including fines and imprisonment. The maximum penalties can vary depending on the specific breach and the circumstances surrounding it, but they are designed to ensure compliance with the Act's requirements.
It is important for all parties involved, including applicants, the CEO, and importers, to be aware of their obligations under the Act to avoid any potential civil or criminal consequences. Failure to comply with the conditions of a TCO or the procedural requirements for applying for one can result in severe penalties, including financial penalties and legal action. The Act aims to ensure that the customs duty concessions are applied fairly and only when the criteria are fully met.