EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0815373
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.
Phillip Morris Ltd applied for a TCO in respect of certain plywood tobacco storage bins parts on 01 July 2008.
Instrument
TCO No 0815373 was made on 19 September 2008. It declares that those certain plywood tobacco storage bins parts 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. 0815373 is taken to have come into force on 01 July 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 Parliament of Australia, provides a framework for the imposition of customs duties on imported goods, among other functions. One notable feature of the Act is its provision for Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on specified goods. The problem or gap addressed by this legislation is the need for a mechanism to provide relief to importers of certain goods that are not produced domestically, thereby encouraging trade and supporting industries that rely on imported components. Tariff Concession Instrument No. 0815373, introduced by the Chief Executive Officer of Customs, was established to facilitate this process, ensuring that applications for TCOs are assessed against specific criteria to determine eligibility. The policy objective of this instrument is to support Australian industries by reducing the cost of imported goods, which can enhance competitiveness and economic growth.
Scope and Application
The Tariff Concession Instrument No. 0815373 under the Customs Act 1901 applies specifically to entities seeking tariff concessions for certain goods, in this case, plywood tobacco storage bins parts. This legislation is enacted at the Commonwealth level, indicating that its application is national in scope. The Act allows for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to reduce the customs duty on specified goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. This concession aims to benefit importers by potentially reducing their duty liabilities on these goods. The application process requires that no submissions opposing the concession be received after a notice is published in the Gazette. The TCO in question was made on 19 September 2008, effective from 1 July 2008, and provides that the goods in question are subject to a duty rate of free, as opposed to the general rate of 5%. Importantly, the TCO does not affect existing rights or impose new liabilities on individuals or entities other than the Commonwealth, ensuring that only the rights of importers are beneficially impacted.
Key Provisions
The key operative sections of this legislation (sections 269C, 269B, 269E, 269P, 269F, and 269K) establish a framework for the creation and application of Tariff Concession Orders (TCOs) under the Customs Act 1901. A TCO can be applied for by a person under section 269F, and if the application meets the core criteria set out in section 269C, the Chief Executive Officer of Customs (CEO) must make a written order (section 269P(3)). Section 269B defines terms such as "goods produced in Australia" and "ordinary course of business", which are crucial for determining the eligibility of a TCO application. Section 269K requires the CEO to publish a notice in the Gazette inviting submissions regarding the application, while section 269S(1) sets the effective date of the TCO as the date of the application.
The obligations imposed by the Customs Act 1901 on parties governed by this legislation include the requirement for applicants to ensure that their applications for TCOs meet the core criteria outlined in section 269C, particularly in relation to the non-production of substitutable goods in Australia. The CEO is obligated to publish notices in the Gazette (section 269K) and to consider submissions made in response to these notices. Importers, once the TCO is in effect, have the right to apply for a refund of duty on goods imported since the TCO's effective date (Regulation 126(1)(r)). Additionally, the CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose any liabilities on them in respect of actions taken prior to the TCO's registration.
Failure to comply with the provisions of the Customs Act 1901 may result in legal consequences. Although the explanatory statement does not explicitly detail the specific offences or penalties for breaches of the Act, breaches of customs legislation generally can result in significant civil or criminal penalties. For instance, under the Customs Act 1901, offences can lead to fines and imprisonment. The maximum penalties for serious offences can include fines of up to $220,000 and imprisonment for up to 10 years for corporations, and fines of up to $44,000 and imprisonment for up to 5 years for individuals, depending on the severity and intent of the breach. Additionally, administrative penalties such as pecuniary penalties and recovery of unremitted duty may apply. It is crucial for all parties to adhere to the requirements and obligations outlined in the Act to avoid these potential consequences.