EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0720878
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.
Cargill Australia Ltd applied for a TCO in respect of certain dextrose monohydrate on 05 December 2007.
Instrument
TCO No 0720878 was made on 29 February 2008. It declares that those certain dextrose monohydrate 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 4%. 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. 0720878 is taken to have come into force on 05 December 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. 0720878, enacted in 2008, is a specific instrument under the Customs Act 1901 designed to facilitate tariff concessions for certain goods. This particular instrument was introduced to address the need for lower customs duty rates for specific goods that are not produced domestically and thus cannot be substituted with locally manufactured alternatives. The Tariff Concession Orders (TCOs) scheme, established under Part XVA of the Customs Act 1901, allows the Chief Executive Officer of Customs to grant such concessions to applicants, provided the goods in question meet the specified core criteria. The policy objective is to encourage the importation of goods that are not produced in Australia by reducing or eliminating customs duties, thereby supporting trade and potentially lowering costs for importers.
The enactment of this instrument was carried out by the relevant authority under the Customs Act 1901, ensuring that the process of applying for and receiving a tariff concession aligns with the legislative framework established to manage customs duties. The Tariff Concession Instrument No. 0720878, which was applied for by Cargill Australia Ltd in respect of certain dextrose monohydrate, exemplifies the application of this scheme. It was published in the Gazette, and no submissions were received against its implementation, leading to its effective date being the day the application was lodged, 5 December 2007.
Scope and Application
The Customs Act 1901, as amended, includes provisions for the creation of Tariff Concession Orders (TCOs) which apply to goods that are eligible for a reduced rate of customs duty. This scheme is outlined in Part XVA of the Act, which enables the Chief Executive Officer of Customs (CEO) to make TCOs upon application by a person, provided the goods do not fall within the exclusions specified in section 269SJ of the Act. The core criteria for a TCO, as stipulated in section 269C, require that on the day the application is lodged, there are no substitutable goods produced in Australia in the ordinary course of business. The definitions of key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are further elaborated in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that an application meets these criteria, they must make a written order declaring that the goods subject to the TCO application are eligible for a prescribed tariff concession. In the specific case of TCO No. 0720878, the CEO determined that certain dextrose monohydrate was eligible for a tariff concession under item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a reduction from a general duty rate of 4% to a rate of free duty for these goods. The TCO does not disadvantage any person by affecting rights as at the date of registration, nor does it impose any liabilities on persons other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 0720878 under the Customs Act 1901 (section 269F) provides for the granting of a Tariff Concession Order (TCO) to Cargill Australia Ltd for certain dextrose monohydrate, effective from 05 December 2007. The TCO (section 269P(3)) was issued on 29 February 2008, declaring that these specific dextrose monohydrate are subject to a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, as opposed to the general 4% duty rate. This concession applies when the Chief Executive Officer (CEO) of Customs determines that no substitutable goods were produced in Australia on the date of the application, in accordance with sections 269C and 269D of the Act.
Under the Customs Act 1901, the CEO has the responsibility to evaluate TCO applications to ensure they meet the core criteria outlined in section 269C. This involves confirming that no substitutable goods were produced in Australia in the ordinary course of business on the application date, as defined in sections 269E and 269D of the Act. If the CEO determines that the application satisfies these criteria, they are mandated to issue a written TCO. For Cargill Australia Ltd, the CEO found that the application met the necessary conditions, hence the issuance of TCO No. 0720878.
In accordance with subsection 269K(1) of the Act, the CEO was required to publish a notice in the Gazette inviting any interested parties to submit objections if they believed the TCO should not be granted. However, in this case, no submissions were received in response to this notice. The TCO itself came into effect on the date the application was lodged, 05 December 2007, as stipulated by subsection 269S(1) of the Act. Importantly, this TCO does not retroactively affect the rights of any person, ensuring that no one, except the Commonwealth, is disadvantaged or subjected to new liabilities for actions taken prior to the TCO's effective date.
Failure to comply with the requirements set out in the Customs Act 1901 could result in civil or criminal penalties. For instance, if a person knowingly makes a false statement in an application for a TCO, they may be subject to a civil penalty of up to 10,000 penalty units under section 283-126 of the Crimes Act 1914. Additionally, under section 283-299 of the same Act, individuals could face criminal penalties for knowingly making false statements in relation to TCO applications, which include fines of up to 210,000 penalty units or imprisonment for up to 10 years, or both. These penalties underscore the importance of accurate and truthful information in TCO applications.