EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705866
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.
Roland DG Australia Pty Ltd applied for a TCO in respect of certain scanning and/or milling machines on 23 April 2007.
Instrument
TCO No 0705866 was made on 29 June 2007. It declares that those certain scanning and/or milling machines 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. 0705866 is taken to have come into force on 23 April 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, enacted by the Parliament of Australia, establishes a framework through which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) to reduce customs duty on specific goods. This mechanism was introduced to address the need for tariff relief for certain imported goods, ensuring that Australian businesses can access competitive products that are not locally produced. The policy objective is to facilitate trade and economic efficiency by lowering the duty on goods for which no suitable domestic alternatives exist. The Tariff Concession Instrument No. 0705866, made under this Act, provides a concession on customs duty for certain scanning and/or milling machines, reflecting the absence of substitutable goods produced in Australia and aligning with the legislative criteria for tariff relief.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislative provision allows for a reduced rate of customs duty to apply to goods specified in a TCO. The Act applies to individuals or entities that seek tariff concessions for specific goods, ensuring that such goods are not being produced domestically in a manner that would substitute for the imported goods. A TCO can only be issued if the CEO is satisfied that the application meets core criteria, notably that no substitutable goods are produced in Australia. This criterion is defined under sections 269C, 269D, and 269E of the Act. The application process includes a requirement for the CEO to publish a notice in the Gazette, inviting objections from interested parties, though no objections were raised in this instance. The TCO has a jurisdictional reach across Australia and applies to the Commonwealth, with its effects commencing on the date the application was lodged. Notably, the TCO does not impose any liabilities or affect the rights of any person other than the Commonwealth, and importers can apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901, through Part XVA, establishes the framework for Tariff Concession Orders (TCOs) as outlined in sections 269C and 269P(3) (subsections). Essentially, this section of the Act allows for a lower rate of customs duty on specific goods if the Chief Executive Officer (CEO) of Customs decides to issue a TCO. This decision hinges on the applicant proving that the goods in question are not substitutable by any goods already produced in Australia, as defined under section 269D. The CEO must also ensure that the application does not involve goods prohibited by section 269SJ. If the CEO finds that the application meets these criteria, a TCO is issued, reducing the customs duty on the specified goods, as seen in TCO No. 0705866, which lowered the duty on certain scanning and/or milling machines from 5% to 0%.
Entities and individuals governed by the Customs Act 1901 must comply with the requirements set forth in the legislation to be eligible for a TCO. This includes ensuring that the goods they wish to import are not substitutable by any Australian-produced goods and that they meet the conditions specified under section 269SJ. Moreover, applicants must submit a valid application to the CEO, who will then assess whether the application meets the core criteria before issuing a TCO. In the case of Roland DG Australia Pty Ltd, this involved demonstrating that the scanning and/or milling machines they sought to import were not substitutable by any goods already being produced in Australia.
The Customs Act 1901 imposes specific obligations on applicants seeking a TCO. For instance, they must ensure that their application is lodged in accordance with the provisions of section 269F and that they provide sufficient evidence to demonstrate that the goods are not substitutable by any Australian-produced goods. Failure to meet these obligations can result in the CEO rejecting the application. Additionally, under section 269K(1), the CEO is mandated to publish a notice in the Gazette inviting submissions from any interested parties who may oppose the issuance of a TCO. Non-compliance with these obligations could result in the rejection of the TCO application, as seen in the case where no submissions were received in response to the Gazette notice for TCO No. 0705866.
In terms of penalties and consequences, the Customs Act 1901 does not explicitly state penalties for non-compliance with the TCO provisions. However, breaches of customs laws generally can result in both civil and criminal penalties. Civil penalties may include fines, while criminal penalties can lead to imprisonment. For example, under section 234 of the Customs Act 1901, penalties for making a false statement or document can result in fines up to 10,000 penalty units or imprisonment for up to five years, or both. Additionally, any failure to comply with the conditions of a TCO could potentially lead to the revocation of the TCO and the reimposition of the original customs duty rates on the goods in question.