EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703393
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.
Philip Morris applied for a TCO in respect of certain cigarette filter rod manipulators and conveyors on 01 March 2007.
Instrument
TCO No 0703393 was made on 18 May 2007. It declares that those certain cigarette filter rod manipulators and conveyors 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. 0703393 is taken to have come into force on 01 March 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, amended by the Tariff Concession Instrument No. 0703393 in 2007, establishes a framework for granting tariff concessions on specific goods. This legislative instrument was enacted to address the need for a streamlined process to reduce customs duty on particular imported goods, where no substitutable Australian-made alternatives exist. The authority to make Tariff Concession Orders lies with the Chief Executive Officer of Customs, who must assess applications against specified criteria, including the absence of Australian-produced goods that serve the same purpose as the imported items. The policy objective behind this legislation is to facilitate the importation of goods that are not domestically produced, thereby encouraging trade and potentially reducing costs for businesses and consumers.
The Customs Act 1901, as supplemented by Instrument No. 0703393, allows the CEO to issue a Tariff Concession Order (TCO) if certain conditions are met, such as the non-existence of substitutable Australian goods. In this instance, Philip Morris successfully applied for a TCO concerning cigarette filter rod manipulators and conveyors, leading to the exemption of these goods from the general duty rate of 5%, making them duty-free. The process involved publishing a notice in the Gazette to invite objections, which did not materialise, allowing the TCO to take effect from the date of the application. This legislative measure ensures that while the rights of importers are positively impacted by potential duty refunds, no new liabilities are imposed on any party, thereby maintaining a balance between facilitating trade and protecting existing rights.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, facilitates the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (the CEO) for certain goods. This legislation applies to any person who seeks to import goods that are not specified in section 269SJ of the Act, which excludes certain goods from TCOs. The application process requires the CEO to assess whether the goods in question are not substitutable by any goods produced in Australia in the ordinary course of business, as defined by sections 269D, 269E, and 269F of the Act. If the CEO determines that no such substitutable goods exist, a TCO can be issued, granting the specified goods a lower rate of customs duty. This instrument applies on a national level across Australia, with the CEO having the authority to make these orders. The scope of this legislation can be further extended through subordinate instruments, allowing for more detailed regulations and conditions to be set forth regarding the application and enforcement of TCOs.
Key Provisions
The main operative sections of this legislation (F2007L01497) provide for the creation of Tariff Concession Orders (TCOs) under the Customs Act 1901 (the Act). A TCO allows for a lower rate of customs duty on goods specified in the order (sections 269C and 269P(3)). The instrument in question, TCO No. 0703393, was made on 18 May 2007, and it applies to certain cigarette filter rod manipulators and conveyors, which are now subject to a duty rate of free, as opposed to the general rate of 5% (section 269P(3)). This TCO came into effect on 01 March 2007, the date on which the application was lodged (subsection 269S(1)).
Under this Act, the Chief Executive Officer of Customs (the CEO) has the authority to make a TCO if they are satisfied that the application meets the core criteria, namely, that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The CEO must also ensure that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO (subsection 269P(3)). In the case of TCO No. 0703393, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of the order.
The Act imposes certain obligations on parties applying for a TCO. An applicant must submit a valid application to the CEO (section 269F), and the CEO must ensure that the application meets the core criteria (subsection 269P(3)). The CEO is also required to publish a notice in the Gazette, inviting any person who believes the TCO should not be made to lodge a submission (subsection 269K(1)). In this case, no submissions were received by the CEO. The Act also requires the CEO to ensure that a TCO does not disadvantage any person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration (subsection 269S(4)).
Breaching the provisions of the Customs Act 1901 can lead to various offences and penalties. For example, section 236 of the Act imposes a maximum penalty of 10,000 penalty units or imprisonment for five years, or both, for fraudulent conduct or assisting another person to commit an offence against the Act. Additionally, section 238 of the Act imposes a maximum penalty of 10,000 penalty units or imprisonment for two years, or both, for making a false statement or supplying false information to a Customs officer. In the context of TCOs, failure to comply with the Act's requirements for applying for and making a TCO may result in the order being deemed invalid or subject to legal challenge. However, the specific penalties for such breaches are not outlined in the Act or the explanatory statement.