EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710143
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.
Phillip Morris Limited applied for a TCO in respect of certain tobacco spraying system on 28 June 2007.
Instrument
TCO No 0710143 was made on 18 December 2007. It declares that those certain tobacco spraying systems 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. 0710143 is taken to have come into force on 28 June 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. 0710143, enacted in 2007 under the Customs Act 1901, addresses the issue of providing tariff concessions for specific goods that are not produced domestically in Australia. The Customs Act 1901, enacted by the Commonwealth Parliament, established a framework for tariff concessions through Tariff Concession Orders (TCOs) that can be applied for by interested parties and approved by the Chief Executive Officer of Customs. The policy objective of the Act is to provide relief from customs duty for goods that are not produced in Australia in the ordinary course of business, thus ensuring that such goods are not subject to higher tariffs and remain competitive in the market. This instrument specifically allows for the concession of customs duty on certain tobacco spraying systems, which, prior to the concession, carried a duty rate of 5%. This concession came into effect from the date of the application, 28 June 2007, and no submissions were received in opposition to the concession.
Scope and Application
The Tariff Concession Instrument No. 0710143 under the Customs Act 1901 applies specifically to certain tobacco spraying systems, providing a lower rate of customs duty for these goods. This Act extends to the Commonwealth of Australia and applies to goods that are subject to a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. The scope of the Act includes goods that are not produced in Australia and are not listed in section 269SJ, which specifies goods that cannot be subject to a TCO. The application of the Act is limited to goods that meet the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. Any person, including Phillip Morris Limited in this case, can apply for a TCO, and the CEO is obligated to make a written order if the application meets the criteria. The TCO does not impose any liabilities on any person and does not disadvantage or impose liabilities on any person in respect of anything done or omitted before the date of registration. The instrument came into effect on 28 June 2007, the day the application for the TCO was lodged.
Key Provisions
The key sections of the Customs Act 1901, specifically in relation to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269K, 269P, and 269S. Section 269F enables an application to be made to the Chief Executive Officer of Customs (CEO) for a TCO, while section 269C sets out the core criteria that must be met for the application to be successful. If the CEO determines that the application meets these criteria, they are required under section 269P(3) to make a written order, or TCO, which specifies the goods to which the concession applies. Section 269K mandates that the CEO must publish a notice in the Gazette inviting submissions from any person who might oppose the making of the TCO, while section 269S outlines when the TCO will come into force.
The obligations imposed by the Act on the parties involved, particularly the CEO, are to assess applications for TCOs against the core criteria specified in section 269C. This involves ensuring that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets the criteria, they must make a TCO. Additionally, the CEO must publish a notice in the Gazette, as per section 269K, inviting submissions from any interested parties regarding the proposed TCO. In the case of TCO No. 0710143, no submissions were received in response to the notice.
Failure to comply with the provisions of the Act can lead to various civil and criminal consequences. While the Act does not explicitly state penalties for non-compliance with TCO provisions, breaches of the Customs Act 1901 in general can result in significant penalties. Under the Crimes Act 1914, a person found guilty of an offence under the Customs Act can be subject to penalties that include substantial fines and imprisonment. For example, offences related to the importation of goods without the required duty can incur penalties up to $220,000 or imprisonment for up to 10 years, or both. The specific consequences for non-compliance with TCO provisions would depend on the nature and severity of the breach, but they could potentially include financial penalties or legal action against the offending party.
In summary, the Customs Act 1901 provides a framework for the creation of Tariff Concession Orders, with specific sections outlining the application process, core criteria, and publication requirements. The CEO is responsible for assessing applications and ensuring compliance with the Act's provisions. While the Act does not detail specific penalties for TCO non-compliance, general penalties for breaches of the Customs Act can be severe, involving substantial fines and imprisonment. The TCO process aims to benefit importers by reducing the duty on specified goods, as seen in the case of Phillip Morris Limited's application for a tobacco spraying system.