EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707188
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.
Krones Pacific Australia Pty Ltd applied for a TCO in respect of certain beverage mixing line on 3 July 2007.
Instrument
TCO No 0707188 was made on 21 September 2007. It declares that those certain beverage mixing line 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. 0707188 is taken to have come into force on 3 July 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 Commonwealth Parliament, provides a framework for the administration of customs and excise in Australia. One of the mechanisms within this framework is the Tariff Concession Order (TCO) scheme, which allows for the reduction or elimination of customs duty on certain goods under specific circumstances. The primary problem this scheme addresses is the promotion of Australian manufacturing and competitiveness by ensuring that imported goods for which there is no Australian-made equivalent are subject to a lower or zero rate of customs duty. This in turn encourages local production and investment by reducing the cost of imported substitute goods. The Tariff Concession Instrument No. 0707188, made on 21 September 2007, exemplifies this scheme in action, as it grants a tariff concession to Krones Pacific Australia Pty Ltd for a particular beverage mixing line, setting the duty rate at 0% instead of the general rate of 5%. This legislative approach ensures that Australian manufacturers are not placed at a competitive disadvantage by cheaper imported alternatives, thereby supporting economic growth and job creation in the manufacturing sector.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These TCOs apply to specific goods for which an application is made and approved by the CEO, provided the goods are not listed in section 269SJ of the Act and meet the core criteria set out in section 269C. The core criteria include the absence of substitutable goods produced in Australia on the date the application was lodged, with definitions for key terms provided in sections 269D, 269E, and 269F of the Act. The scope of the TCO extends to the particular goods specified in the application, applying a reduced rate of customs duty, as illustrated by TCO No. 0707188 concerning a certain beverage mixing line, which applies a 0% duty rate instead of the general 5% rate. The geographic reach of this legislation is national, as it pertains to the importation of goods into Australia. The Act does not specify any exclusions or exemptions, other than those outlined in section 269SJ. Additionally, the Act allows for the extension or restriction of application through subordinate instruments, such as regulations, although no such instruments are mentioned in this context.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Order No. 0707188, detail the process by which a tariff concession can be granted and applied to specific goods. Section 269F (1) of the Customs Act 1901 allows an application to be made to the Chief Executive Officer of Customs for a Tariff Concession Order (TCO) in respect of particular goods. If the CEO is satisfied that the application does not pertain to goods specified in section 269SJ, they must then decide if the application meets the core criteria outlined in section 269C. This involves confirming that no substitutable goods were produced in Australia on the date the application was lodged, as defined by sections 269D and 269E of the Act. If these criteria are met, the CEO is required to issue a written order, which is the TCO, declaring that the goods in question are subject to a specified item in Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on parties governed by this Act include the requirement for applicants to ensure their applications are not for goods listed in section 269SJ, and that the goods do not have Australian-made substitutes. The CEO, on receiving a valid application, must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not proceed. The CEO must also consider these submissions before making a decision on the application. The applicant must provide sufficient evidence to demonstrate that the goods meet the core criteria for a TCO, including proof that no substitutable goods were produced in Australia.
Failure to comply with the requirements of the Customs Act 1901 and the associated Regulations can lead to significant consequences. While the Act does not explicitly detail offences or penalties within the explanatory statement, breaches of customs regulations generally can lead to both civil and criminal penalties. Civil penalties may include fines up to a maximum of $11,000 for individuals and $55,000 for corporations, along with potential additional penalties for ongoing breaches. Criminal penalties can include imprisonment, with the severity depending on the nature and extent of the offence. Additionally, those found to be in breach may face revocation of any tariff concessions granted, leading to a reversion to the original duty rates.