EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0714097
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.
Food Processing Equipment Pty Ltd applied for a TCO in respect of certain cleaning machines on 4 September 2007.
Instrument
TCO No 0714097 was made on 9 November 2007. It declares that those certain cleaning 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. 0714097 is taken to have come into force on 4 September 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 Australian Parliament, serves as the foundational legal framework for regulating customs and border control in Australia. In response to identified gaps in trade facilitation and economic incentives, the Act allows for the creation of Tariff Concession Orders (TCOs) under Part XVA, which provide for reduced or waived customs duties on specified goods. This legislative provision aims to foster competitive advantage for Australian industries by making imported goods more affordable and thereby supporting local manufacturing and economic growth. The introduction of TCOs, as outlined in the Act, seeks to address the economic disparity caused by the absence of domestic production of certain goods, thus facilitating smoother trade practices and boosting economic activity. The Tariff Concession Instrument No. 0714097, issued under the authority of the Customs Act, exemplifies this legislative intent by reducing the customs duty on specific cleaning machines to zero, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the procedure for Tariff Concession Orders (TCOs) which apply to goods that are eligible for a lower rate of customs duty. The Act empowers the Chief Executive Officer of Customs (CEO) to make these orders upon application by a person, provided the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from eligibility. For an application to meet the core criteria, it must be established that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged, as per section 269C of the Act. The definitions of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’, and ‘substitutable goods’ are further clarified in sections 269D, 269E, and 269F respectively. Once the CEO is satisfied that the application meets these criteria, a TCO is issued, as stipulated in subsection 269P(3) of the Act. The CEO must also publish a notice in the Gazette, inviting submissions from any interested parties, although no submissions were received in the case of TCO No. 0714097. This particular TCO applies to certain cleaning machines, which are now subject to a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, as opposed to the general rate of 5%. The TCO does not retroactively affect the rights of any person and does not impose new liabilities; however, it does benefit importers by potentially allowing them to apply for a refund of duty paid on goods imported since the effective date of the TCO.
Key Provisions
The Customs Act 1901 (the Act) establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (the CEO) through Part XVA of the Act. A TCO applies a lower rate of customs duty to specific goods. Under section 269F, an application for a TCO can be submitted to the CEO. The CEO is required to determine if the application meets the core criteria, which include ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). For the purposes of this, ‘substitutable goods’ refers to goods produced in Australia that can be used for the same purpose as the goods the subject of the application (section 269B and 269D). If the CEO is satisfied that the application meets these criteria, they must issue a written order (section 269P(3)).
The obligations imposed by the Act on the parties governed by it are primarily on the CEO, who must consider and respond to valid applications for TCOs in accordance with the statutory criteria. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO proceeds to make the TCO. The CEO’s decisions must be made in accordance with the provisions of the Act, ensuring that the application meets the specified criteria and that any public submissions are considered.
Failure to comply with the provisions of the Customs Act 1901, particularly in the context of making TCOs, may lead to civil or criminal consequences. While the Act does not explicitly detail the penalties for non-compliance in the context of TCOs, general penalties under the Customs Act may apply. For breaches of the Act, individuals or entities may face fines and, in more serious cases, imprisonment. The maximum penalties would depend on the specific nature of the breach and would be determined by the relevant courts.
In summary, the Act provides a framework for the CEO to issue TCOs, ensuring that the process is transparent and fair. It imposes specific obligations on the CEO to consider applications and make decisions based on the criteria outlined in the Act. Failure to adhere to these provisions could result in civil or criminal penalties, underscoring the importance of compliance with the legislative requirements.