EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0805150
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.
Arnott's Biscuits Limited applied for a TCO in respect of certain snack food expanders on 24 April 2008.
Instrument
TCO No 0805150 was made on 18 July 2008. It declares that those certain snack food expanders 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. 0805150 is taken to have come into force on 24 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 Customs Act 1901 was enacted to provide for the administration of the Customs Tariff and to facilitate international trade by regulating the import and export of goods. One of the ways it does this is through the creation of Tariff Concession Orders (TCOs) under Part XVA, which can lower the rate of customs duty for specified goods. This mechanism was introduced to address the problem of ensuring that Australian industries can compete fairly in the global market by providing relief from customs duties where necessary. The instrument F2008L02754, known as Tariff Concession Instrument No. 0805150, was enacted by the Chief Executive Officer of Customs following an application by Arnott's Biscuits Limited on 24 April 2008. The instrument was made on 18 July 2008 and came into force on the date the application was lodged, as per the provisions of the Customs Act. The policy objective behind this TCO is to ensure that Australian businesses, particularly smaller or niche manufacturers, are not unduly burdened by customs duties, thus encouraging local production and innovation.
Scope and Application
The Customs Act 1901, through the Tariff Concession Instrument No. 0805150, applies to the specific goods identified in the instrument, namely certain snack food expanders, and pertains to the application and approval of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The Act is designed to facilitate the reduction or waiver of customs duty for goods that are not produced in Australia and have no substitutable goods produced domestically. The geographic scope of the Act is national, as it operates under the Commonwealth jurisdiction to regulate customs duties across Australia. The application of a TCO is contingent upon the core criteria set out in the Act, specifically that no substitutable goods are produced in Australia on the day the application is lodged. The instrument specifies that the TCO applies from the date the application was made, in this case, 24 April 2008. Notably, the TCO does not affect the rights of any person adversely and does not impose any new liabilities; however, it does entitle eligible importers to apply for a refund of duties paid on these goods since the effective date of the TCO.
Key Provisions
The Tariff Concession Order No. 0805150, made under section 269F of the Customs Act 1901, applies a zero rate of customs duty to certain snack food expanders that Arnott's Biscuits Limited applied for on 24 April 2008. The CEO of Customs decided to make this order after assessing the application and determining that no substitutable goods were produced in Australia at the time of the application (sections 269C and 269P(3)). The normal rate of duty for these goods is 5%, but the concession reduces this to free. This means that importers of these snack food expanders will not need to pay customs duty on them once the order is in effect.
The Customs Act 1901 imposes several obligations on parties subject to Tariff Concession Orders. For instance, applicants like Arnott's Biscuits Limited must ensure that their applications meet the core criteria as specified in section 269C of the Act. They must provide sufficient information to demonstrate that no substitutable goods are being produced in Australia. The CEO, on the other hand, must review the application, consider any submissions received from interested parties, and publish a notice in the Gazette inviting comments on the proposed order (subsection 269K(1)). If no objections are raised, the CEO is required to make the order.
Failure to comply with the provisions of the Customs Act 1901 can lead to various consequences. The Act does not explicitly state penalties for non-compliance in the context of Tariff Concession Orders. However, general provisions in the Customs Act may apply, which can include fines and imprisonment for offences related to customs duties. For instance, section 230 of the Act imposes penalties for making false or misleading statements in the context of customs and excise, which can include fines of up to $22,200 for individuals and $111,000 for corporations. Importers who fail to take advantage of the concessions or who attempt to circumvent the duty provisions may also face penalties.
The Tariff Concession Order No. 0805150 came into force on 24 April 2008, the date the application was lodged (subsection 269S(1)). This means that the duty concessions apply retroactively from that date. Importers can apply for refunds of any duty paid on goods imported since the effective date of the order. Importantly, the order does not affect the rights of any person, except to the extent that it imposes no new liabilities on anyone other than the Commonwealth (subsection 269S(2)). This ensures that the rights of existing parties are protected, and no one is disadvantaged by the imposition of the order.