EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717343
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.
Unigrain Pty Ltd applied for a TCO in respect of certain kiln and steam conditioner on 12 October 2007.
Instrument
TCO No 0717343 was made on 31 January 2008. It declares that those certain kiln and steam conditioner 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. 0717343 is taken to have come into force on 12 October 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, provides a framework for the administration of customs duties and the regulation of the importation and exportation of goods. To address gaps in the tariff structure and to support specific industries, Part XVA of the Act establishes a mechanism through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This provision allows for a lower rate of customs duty on goods specified in a TCO, provided certain criteria are met. The policy objective is to support industries that might otherwise be disadvantaged by not having locally produced alternatives, thereby encouraging the importation of specific goods that are essential for certain uses and are not readily available in Australia.
Unigrain Pty Ltd applied for a TCO for certain kiln and steam conditioner, which was granted on 31 January 2008, following the CEO's satisfaction that no substitutable goods were produced in Australia. The CEO published a notice in the Gazette inviting any interested parties to lodge submissions, but none were received. Consequently, Tariff Concession Order No. 0717343 was made, effective from 12 October 2007, the date the application was lodged. This order effectively reduces the duty on these specified goods from the general rate of 5% to free, benefiting importers who can apply for duty refunds on goods imported since the TCO came into force.
Scope and Application
The Tariff Concession Instrument No. 0717343 applies to individuals or entities that import certain kiln and steam conditioners, providing them with a lower rate of customs duty as per the provisions of Part XVA of the Customs Act 1901. This instrument was issued by the Chief Executive Officer of Customs, in response to an application by Unigrain Pty Ltd, and it specifies that these particular goods are to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a tariff rate of free, as opposed to the general rate of 5%. The application of this Instrument is confined to the Commonwealth of Australia and it does not extend to any state or territory legislation. The Act does not provide any exclusions or exemptions, however, it is contingent on the core criteria being met, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Any further elaboration or specific conditions may be detailed in subordinate instruments, although the primary legislation itself does not provide for such extensions or restrictions.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (s 269F). This legislative provision allows for a reduced rate of customs duty on goods that are subject to a TCO. An application for a TCO can be made by any person to the CEO, provided it is not for goods specified in section 269SJ of the Act, which are ineligible for a TCO (s 269F). The CEO is required to assess whether the application meets the core criteria outlined in section 269C. This assessment hinges on whether, on the date of the application, there were no substitutable goods produced in Australia in the ordinary course of business (s 269C). Substitutable goods, as defined in section 269D, are goods produced in Australia that can be used for the same purpose as the goods in question (s 269D).
The obligations imposed on the CEO by the Customs Act 1901 include the requirement to publish a notice in the Gazette after accepting a TCO application as valid. This notice must invite any person who believes there are reasons why the TCO should not be granted to submit their views to the CEO (s 269K(1)). In the case of Unigrain Pty Ltd's application for a TCO concerning certain kiln and steam conditioner, no submissions were received in response to this invitation. If the CEO is satisfied that the application meets the core criteria, they must issue a written order declaring that the goods in question are subject to a prescribed tariff item, as specified in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). For Unigrain Pty Ltd, this resulted in a TCO reducing the duty on these goods from 5% to free.
The Act also sets out the consequences for non-compliance with its provisions. Although the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for breach of a TCO, general provisions of the Customs Act 1901 and related regulations may apply. For instance, failing to comply with the terms of a TCO could potentially result in financial penalties, legal action, or other enforcement measures as outlined in the relevant sections of the Act and associated regulations. The explanatory statement clarifies that the TCO does not affect the rights of any person other than the Commonwealth or impose liabilities on such persons in respect of actions taken prior to the TCO's effective date. It also notes that the rights of importers will be positively affected, allowing them to apply for duty refunds on goods imported since the TCO's effective date (Reg 126(1)(r)).