EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0801135
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.
Mrs Mac's Pty Ltd applied for a TCO in respect of certain food processing freezers on 18 January 2008.
Instrument
TCO No 0801135 was made on 4 April 2008. It declares that those certain food processing freezers 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. 0801135 is taken to have come into force on 18 January 2008.
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 Commonwealth Parliament, establishes a framework for the administration of customs and excise duties. This Act provides the authority for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs), which are designed to reduce customs duty on specific goods, provided certain criteria are met. The problem or gap addressed by this legislative framework is the need to facilitate the import of goods that are not produced domestically or are not readily substitutable by Australian-made products, thereby encouraging trade and economic efficiency. The policy objective is to ensure that the Australian market has access to competitively priced goods without imposing undue burdens on domestic industries. The Tariff Concession Instrument No. 0801135, issued under this Act, exemplifies the process by which the CEO assesses and approves applications for tariff concessions, ensuring that they align with the legislative criteria and do not disadvantage other stakeholders.
Scope and Application
The Customs Act 1901, as outlined in Tariff Concession Instrument No. 0801135, provides a framework for the application and administration of Tariff Concession Orders (TCOs) which are intended to reduce the rate of customs duty on specified goods. This legislation applies to entities or individuals who apply for tariff concessions on goods that are not being produced in Australia in the ordinary course of business and meet the criteria set out in sections 269B to 269SJ of the Act. The application process involves the Chief Executive Officer of Customs who evaluates the application against the criteria, and if satisfied, issues a TCO. The geographic scope of this legislation is national, as it pertains to customs duty across Australia. The Act does not specify exclusions other than those goods listed in section 269SJ, which are ineligible for tariff concessions. Additionally, the commencement of a TCO is effective from the date of the application, not the date of the order, ensuring that there are no retroactive disadvantages to any parties. The instrument allows for the application of subordinate instruments to further detail the administration and application of TCOs, thereby extending or clarifying the scope of the primary Act.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes the framework for Tariff Concession Orders (TCOs) (s 269F). An individual or entity may apply to the Chief Executive Officer of Customs (CEO) for a TCO to reduce the customs duty on certain goods (s 269F). If the application is not for goods excluded under section 269SJ, the CEO assesses whether it meets the core criteria set out in section 269C. This requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). If the CEO is satisfied with the application, they must make a written order declaring the goods subject to a lower rate of duty (s 269P(3)).
The obligations under this Act require the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application (s 269K(1)). This notice invites any person who believes the TCO should not be made to submit their reasons to the CEO. In the case of TCO No. 0801135, no such submissions were received. Once the application is deemed valid, the TCO comes into effect on the day the application was lodged (s 269S(1)). This means that the TCO applies retroactively from the date of the application, which in this instance was 18 January 2008.
The Act also ensures that a TCO does not affect the rights of any person, except the Commonwealth, as at the date of registration in a way that would disadvantage them or impose liabilities for actions taken before the registration date (s 269S(4)). However, it does benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force (Reg 126(1)(r)). Importantly, the TCO does not impose any new liabilities on any person.
Regarding potential breaches, while the Act does not specify penalties for failing to comply with the TCO process, it does state that any person who contravenes the provisions of the Customs Act 1901 may be subject to civil or criminal penalties. These penalties can include fines and imprisonment, depending on the severity and intent of the breach. The exact penalties are outlined in other sections of the Act and related legislation.