EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710736
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.
Alphapharm Pty Ltd applied for a TCO in respect of certain homogenisers on 09 July 2007.
Instrument
TCO No 0710736 was made on 02 October 2007. It declares that those certain homogenisers 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. 0710736 is taken to have come into force on 09 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 Tariff Concession Instrument No. 0710736, enacted in 2007 under the Customs Act 1901, was introduced to address the issue of providing tariff concessions on specific goods, in this case certain homogenisers, to promote economic efficiency and competitiveness in the Australian market. The Customs Act 1901 established a framework for the Chief Executive Officer of Customs to consider applications for Tariff Concession Orders (TCOs) that would apply lower rates of customs duty to specified goods if certain criteria are met, such as the absence of substitutable goods produced in Australia. The policy objective of this instrument is to facilitate the import of goods that are not produced domestically, thereby encouraging trade and potentially reducing costs for businesses and consumers.
The Tariff Concession Instrument No. 0710736 was developed following an application by Alphapharm Pty Ltd for a TCO concerning certain homogenisers, with the Chief Executive Officer of Customs determining that the application met the core criteria and that no substitutable goods were produced in Australia. Consequently, the instrument declares that these homogenisers are subject to a free rate of duty, down from the general rate of 5%, and this concession is effective from the date the application was lodged, 9 July 2007. The instrument was published in the Gazette, inviting submissions, though none were received, and it does not affect existing rights or impose new liabilities, with importers eligible for duty refunds on eligible goods imported since the effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This legislation applies to individuals or entities seeking to import goods that are eligible for reduced customs duty rates, provided such goods are not specified in section 269SJ of the Act, which excludes certain types of goods from tariff concessions. The Act mandates that for a TCO application to meet core criteria, no substitutable goods must be produced in Australia at the time the application is lodged, as per section 269C. This concession is applicable nationwide and is subject to the conditions outlined in the Customs Tariff Act 1995. The scope of the Act is further extended through subordinate instruments which may provide additional details or modify the application of the primary legislation. Importantly, the Act ensures that the implementation of a TCO does not disadvantage any person or impose liabilities for actions taken prior to the TCO’s effective date, while providing benefits such as duty refunds to importers of the specified goods.
Key Provisions
The Tariff Concession Instrument No. 0710736 primarily focuses on establishing the conditions under which certain homogenisers qualify for tariff concessions under the Customs Act 1901 (section 269C). If the Chief Executive Officer of Customs (CEO) is satisfied that no substitutable goods were produced in Australia on the day the application was lodged, a Tariff Concession Order (TCO) will be made (section 269P(3)). In this instance, item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in the duty on these homogenisers being set at free, down from the general rate of 5% (section 269S(1)). The TCO is effective from 09 July 2007, the date the application was lodged, and does not retroactively affect any pre-existing rights or liabilities (section 269S(1)).
Under this legislation, several obligations are imposed on the parties involved. The CEO must ensure that any application for a TCO is assessed against the core criteria, particularly focusing on whether substitutable goods are produced in Australia (section 269C). The CEO must also publish a notice in the Gazette inviting submissions if any party believes the TCO should not be granted (subsection 269K(1)). If no submissions are received, the CEO proceeds with issuing the TCO. Importers benefit from this order as they can apply for a refund of duty paid on imports of the specified homogenisers since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Any breach of the provisions outlined in the Customs Act 1901 can lead to significant legal consequences. For example, if an entity falsely claims that no substitutable goods were produced in Australia, resulting in an unwarranted TCO, this could be viewed as a form of fraud. Penalties for such offences can include fines and imprisonment, as stipulated by relevant sections of the Customs Act. The specific penalties may vary depending on the nature and severity of the breach but are designed to deter non-compliance and ensure the integrity of the tariff concession process.