EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703580
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.
Global Cold Chain Solutions Pty Ltd applied for a TCO in respect of certain isothermal boxes on 06 March 2007.
Instrument
TCO No 0703580 was made on 06 July 2007. It declares that those certain isothermal boxes 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. 0703580 is taken to have come into force on 06 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 Tariff Concession Instrument No. 0703580, made under the Customs Act 1901, was enacted in 2007 to address the need for reduced customs duties on certain goods that are not produced domestically. This legislation was introduced to facilitate the importation of goods that are essential but not manufactured in Australia, thereby supporting economic efficiency and consumer access to a broader range of products. The enacting body was the Chief Executive Officer of Customs, who was empowered under section 269F of the Act to make Tariff Concession Orders (TCOs) after assessing applications against specific criteria. The policy objective was to ensure that the application for tariff concessions did not pertain to goods produced domestically and met the conditions outlined in section 269C of the Act. This approach aimed to avoid any disadvantage to importers and to potentially provide them with the benefit of duty refunds for goods imported before the TCO was officially registered.
Scope and Application
The Customs Act 1901, as modified by Tariff Concession Instrument No. 0703580, provides for the application of Tariff Concession Orders (TCO) which can lower the customs duty on specified goods. This Act applies to any person or entity that imports goods into Australia and seeks to benefit from a lower duty rate under a TCO. The Chief Executive Officer of Customs (CEO) is responsible for assessing applications for TCOs and deciding whether they meet the core criteria, which includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business at the time of application. The CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO before it is granted. The TCO applies nationally and comes into force on the date the application is lodged, though it does not affect any rights or liabilities accrued before this date. Global Cold Chain Solutions Pty Ltd's application for certain isothermal boxes resulted in TCO No. 0703580, which came into force on 6 March 2007 and granted a duty-free status to the specified goods, lowering the general duty rate from 5% to free.
Key Provisions
The Customs Act 1901 (section 269F) establishes a framework allowing the Chief Executive Officer (CEO) of Customs to issue Tariff Concession Orders (TCOs) for specific goods, providing a lower rate of customs duty. Section 269C stipulates that an application for a TCO will be considered if, at the time of application, there are no substitutable goods produced in Australia. To qualify, the goods must not be specified in section 269SJ, which lists items ineligible for TCOs. The CEO determines if the application meets these core criteria, and if satisfied, issues a TCO under section 269P(3), specifying the reduced duty rate applicable to the goods.
In response to Global Cold Chain Solutions Pty Ltd's application for a TCO on certain isothermal boxes, the CEO issued TCO No. 0703580 on 06 July 2007. The order declares these boxes as subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with a duty rate of 5% generally and free under the TCO. This order came into effect on 06 March 2007, the date of application. The CEO was required to publish a notice in the Gazette under section 269K(1), inviting submissions against the TCO, though none were received. This process ensures transparency and allows for public input on tariff concessions.
Entities governed by the Customs Act, including applicants for TCOs, must adhere to specific obligations. They must ensure their applications meet the core criteria outlined in section 269C, particularly the absence of substitutable goods in Australia. The CEO's decision is contingent on the accuracy and completeness of the information provided. Additionally, entities must comply with any conditions specified in the TCO and report any changes that could affect the concession's validity. Failure to meet these obligations may result in the revocation of the TCO and the reinstatement of the original duty rates.
Breaches of the Customs Act and the associated regulations can lead to serious consequences. Under the Act, any person found guilty of contravening the provisions regarding TCOs may face civil or criminal penalties. Specifically, for offences under section 126, penalties can include fines up to $22,200 for individuals and significantly higher for corporations. Criminal penalties may also apply, with potential imprisonment terms that vary based on the severity of the offence. It is imperative for entities to comply with the Act to avoid these adverse outcomes.