EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0704178
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.
Inghams Enterprises Pty Limited applied for a TCO in respect of certain poultry hatchery lines on 21 March 2007.
Instrument
TCO No 0704178 was made on 08 June 2007. It declares that those certain poultry hatchery 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. 0704178 is taken to have come into force on 21 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. 0704178, enacted in 2007, was established under the Customs Act 1901 to address the need for concessional tariff rates for specific goods not produced domestically. This instrument, crafted by the Chief Executive Officer of Customs, allows for the application of lower customs duty rates on goods that meet certain criteria, particularly where there are no substitutable goods produced in Australia. This approach aims to support industries by making imported goods more competitively priced, thereby encouraging their use and integration into Australian production processes.
The enactment of this instrument by the relevant authority underscores a policy objective to foster economic efficiency and support industries that rely on imported goods not readily available within the country. By facilitating the import of certain poultry hatchery lines at no duty, the instrument aims to benefit importers and potentially reduce overall costs for businesses utilising these goods, ensuring they can operate more competitively without the added burden of high customs duties.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at providing lower rates of customs duty for specified goods. This mechanism applies to individuals and entities seeking tariff concessions for goods not produced in Australia in the ordinary course of business, as defined under the Act. The scope of this legislation encompasses the process of applying for TCOs, the criteria for approval, and the effects of such orders on duty rates and importer rights. Notably, the Act excludes certain goods from eligibility under section 269SJ, and the CEO is mandated to consider applications against the core criteria outlined in section 269C. Once approved, a TCO, such as TCO No. 0704178 for poultry hatchery lines, is published in the Gazette and becomes effective from the date of application lodging. The TCO does not disadvantage any person or impose liabilities for actions prior to its registration, and it allows importers to apply for duty refunds on eligible goods imported since the TCO's effective date.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning specific goods. If the application is not for goods specified in section 269SJ, which lists items ineligible for TCO, the CEO must determine whether the application meets the core criteria set out in section 269C. If satisfied, the CEO must issue a TCO, as per section 269P. This order specifies that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which determines the applicable duty rate.
The Customs Act 1901 imposes several obligations on the parties involved in the TCO process. The CEO must accept a TCO application if it is valid and not for ineligible goods. The CEO must also make a decision based on whether the application meets the core criteria, which include ensuring no substitutable goods were produced in Australia in the ordinary course of business. Once a TCO is issued, it is effective from the date the application was lodged, as specified in section 269S. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, as per section 269K. This ensures transparency and an opportunity for consultation.
Any breaches or non-compliance with the provisions of the Customs Act 1901 regarding TCOs may lead to civil or criminal consequences. The Act does not explicitly detail penalties for non-compliance with TCOs, but general provisions within the Act and related regulations may apply. For example, knowingly making a false statement or representation can result in a fine or imprisonment. The penalties for such offences can vary based on the severity of the breach, but they may include substantial fines or imprisonment terms as outlined in other sections of the Act. Importers can also apply for refunds of duty on goods imported since the TCO was deemed to come into force, under paragraph 126(1)(r) of the Regulations.
The TCO does not affect the rights of any person, other than the Commonwealth, in a way that disadvantages them or imposes liabilities for actions taken before the TCO was registered. Specifically, it benefits importers by potentially reducing their duty payments on the specified goods. This protection ensures that the TCO does not retroactively impose new liabilities or penalties on any party for actions taken before its effective date.