EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718551
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.
Pernod Ricard Pacific Pty Ltd applied for a TCO in respect of certain drainage machine on 30 October 2007.
Instrument
TCO No 0718551 was made on 31 January 2008. It declares that those certain drainage machine 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. 0718551 is taken to have come into force on 30 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 Parliament of Australia, establishes a framework for Tariff Concession Orders (TCOs), which provide lower rates of customs duty on certain goods. This Act was introduced to address the need for flexible tariff arrangements that could benefit businesses by reducing the cost of importing specific goods, particularly when those goods are not produced domestically or when suitable substitutes are unavailable. The explanatory statement for Tariff Concession Instrument No. 0718551, made in 2008, illustrates this framework in action. In this instance, Pernod Ricard Pacific Pty Ltd applied for a TCO for certain drainage machines, and the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thus meeting the core criteria. Consequently, a TCO was issued, setting the duty rate for these specific drainage machines to free, down from the general rate of 5%. The process also ensured that no existing rights or liabilities were adversely affected, aligning with the policy objective of providing tariff relief without imposing new burdens on stakeholders.
Scope and Application
The Tariff Concession Instrument No. 0718551, which is based on the Customs Act 1901, applies to goods that are subject to a Tariff Concession Order (TCO). Specifically, it applies to the certain drainage machines for which Pernod Ricard Pacific Pty Ltd applied on 30 October 2007. The Act enables the Chief Executive Officer of Customs (the CEO) to issue TCOs which result in a lower rate of customs duty for the specified goods. The legislation applies to any person who wishes to import these goods and aims to provide a tariff concession if certain criteria are met, such as the absence of substitutable goods produced in Australia. The Act has a national reach as it operates under the Commonwealth jurisdiction. However, it excludes goods specified in section 269SJ of the Act which cannot be subject to a TCO. The application of the Act may be extended or restricted through subordinate instruments, although no such instruments are mentioned in this context.
Key Provisions
The Customs Act 1901 (the Act) contains provisions under Part XVA that allow the Chief Executive Officer of Customs (the CEO) to issue Tariff Concession Orders (TCOs) for certain goods. When a TCO is issued, it applies a lower rate of customs duty to the specified goods (s 269C). The process begins when a person applies for a TCO in respect of specific goods under section 269F. The CEO must then determine if the application complies with the core criteria outlined in section 269C, primarily ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (s 269C, s 269D, s 269E). If satisfied, the CEO must make a written order declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (s 269P(3)). In this particular case, TCO No. 0718551, issued on 31 January 2008, applies to certain drainage machines, reducing the duty rate from 5% to free under item 50 of Schedule 4.
The Act imposes several obligations on parties involved in the TCO process. An applicant must ensure their application meets the core criteria, particularly focusing on the production of substitutable goods in Australia. The CEO has the duty to review the application, determine if it complies with the core criteria, and make a decision accordingly. Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to lodge a submission (s 269K(1)). In this instance, no submissions were received in response to the published notice. The TCO, once made, comes into force on the day the application for the TCO was lodged (s 269S(1)).
Failure to comply with the requirements set out in the Act may result in civil or criminal consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance, it is implied that any breach of the TCO provisions could lead to legal repercussions. Generally, under the Customs Act, penalties for non-compliance can include fines and, in severe cases, imprisonment. The precise penalties would be determined by the nature and severity of the breach.
The TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration, ensuring no person is disadvantaged or imposed with liabilities for actions taken before the TCO's registration (s 269S(1)). Importers of the goods subject to the TCO will benefit from the reduced duty rate and can apply for a refund of duty on goods imported since the day the TCO came into force (Reg 126(1)(r)). This provision ensures that the TCO's benefits are passed on to those importing the specified goods without imposing any liabilities on any person.