EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0804363
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.
Orica Australia Pty Ltd applied for a TCO in respect of certain labelling machines 31 labels per minute on 18 April 2008.
Instrument
TCO No 0804363 was made on 11 July 2008. It declares that those certain labelling machines 31 labels per minute 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. 0804363 is taken to have come into force on 18 April 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 Tariff Concession Instrument No. 0804363 was enacted in 2008 under the Customs Act 1901 to address the problem of ensuring that Australian businesses have access to competitively priced imported goods when there are no local substitutes. This instrument was introduced by the Australian Government and aims to provide relief by reducing the customs duty on specific imported goods, thereby facilitating the importation of goods that are essential for production or other uses within Australia but are not produced domestically. This legislative action supports the policy objective of maintaining competitive and efficient markets within Australia by allowing for the duty-free importation of certain goods, in this case, labelling machines with a specified output, where no suitable Australian-made alternatives exist.
Scope and Application
The Tariff Concession Instrument No. 0804363 under the Customs Act 1901 applies to any entity that has lodged an application for tariff concessions concerning specific goods, in this case, labelling machines capable of producing 31 labels per minute. The Act specifically targets the concession of customs duties for goods that are not substitutable by Australian-produced alternatives. The application process is overseen by the Chief Executive Officer of Customs, who must ascertain that the goods in question meet the core criteria, notably that no substitutable goods are produced in Australia. The instrument extends its application nationally across Australia and does not discriminate between states or territories, aligning with the overarching national customs policy. However, it excludes goods specified under section 269SJ of the Act, which are not eligible for tariff concessions. The scope of this Act can be further delineated through subordinate instruments, which may specify additional criteria or particulars for different types of goods or industries. Importantly, the instrument does not affect the rights of any person adversely, nor does it impose any liabilities on individuals or entities other than the Commonwealth.
Key Provisions
The main operative sections of this legislation concern the making and operation of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269C). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of specific goods. If the application meets the core criteria, which require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C), the CEO must make a written order (section 269P(3)). This order declares that the goods the subject of the application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting a concession on the duty rate.
The obligations imposed on parties by this Act primarily concern the application process and the decision-making criteria for the CEO. When an application for a TCO is submitted, the CEO must, as soon as practicable, publish a notice in the Gazette inviting any interested parties to submit their views on whether the TCO should be made (subsection 269K(1)). The CEO is required to assess whether the application meets the core criteria, which involves determining if there were no substitutable goods produced in Australia at the time the application was lodged (section 269C). If the criteria are met, the CEO must proceed to make the TCO.
Breach of the provisions of this Act can lead to civil or criminal consequences. Although the specific penalties for breach are not detailed in the explanatory statement, the general framework of the Customs Act 1901 allows for significant penalties for non-compliance. For example, under section 200 of the Customs Act, a person can be fined up to 10,000 penalty units (currently AUD 1.89 million) or imprisonment for up to 10 years, or both, for serious breaches. In the context of TCOs, failure to adhere to the conditions or requirements of a TCO could result in penalties such as fines or other civil remedies for non-compliance.
This legislation also outlines the commencement and effect of the TCO. A TCO is considered to come into force on the day on which the application for the TCO was lodged (subsection 269S(1)). In this case, TCO No. 0804363 is taken to have come into force on 18 April 2008. Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration. Importers of the goods will benefit from the TCO, and under the Customs (Tariff) Regulations 1999, they can apply for a refund of duty on goods imported since the day the TCO came into force.