EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0823598
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.
Coca Cola Amatil Pty Ltd applied for a TCO in respect of certain hot beverage filling systems on 29 July 2008.
Instrument
TCO No 0823598 was made on 24 October 2008. It declares that those certain hot beverage filling systems 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. 0823598 is taken to have come into force on 29 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 Tariff Concession Instrument No. 0823598, enacted under the Customs Act 1901, was introduced to address the need for facilitating imports of specific goods by providing tariff concessions. The Act, enacted by the Commonwealth Parliament, allows for the Chief Executive Officer of Customs to make Tariff Concession Orders that lower the customs duty on particular goods if no substitutable goods are produced in Australia. The policy objective is to support Australian businesses by reducing the cost of importing certain goods, thereby enhancing competitiveness and potentially stimulating economic activity. Coca Cola Amatil Pty Ltd's application for a tariff concession on certain hot beverage filling systems exemplifies how this mechanism operates, with the systems now subject to a zero percent duty rate instead of the general rate of 5%.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders can reduce the rate of customs duty on specific goods, provided the application meets the core criteria set out in the Act. Any person may apply for a TCO in respect of goods, but the application is invalid if the goods are specified in section 269SJ, which lists those ineligible for tariff concessions. An application is considered valid if, on the date it was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, 269E, and 269F. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring the goods subject to a lower duty rate. The TCO's commencement date is the same as the date the application was lodged, and it does not affect any pre-existing rights or impose new liabilities on anyone except the Commonwealth. In the case of Coca Cola Amatil Pty Ltd's application for certain hot beverage filling systems, the CEO issued TCO No. 0823598, effective from 29 July 2008, under which the general duty rate of 5% was reduced to free.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must make a written order (a TCO) declaring that the goods in question are subject to a specified lower rate of customs duty (section 269P(3)). The core criteria include a requirement that no substitutable goods are produced in Australia on the day the application was lodged (section 269C). The TCO instrument, in this case TCO No. 0823598, specifies the particular goods and the rate of duty applicable to them.
The obligations imposed by this Act primarily rest on the CEO of Customs. The CEO must consider applications for TCOs and determine whether they meet the core criteria. This involves verifying that no substitutable goods are produced in Australia on the application date. If the criteria are met, the CEO must issue a TCO. The CEO is also required to publish a notice in the Gazette, inviting submissions from any interested parties regarding the application (subsection 269K(1)). Additionally, the Act requires that the TCO does not affect the rights of any person other than the Commonwealth in a way that would disadvantage them or impose liabilities for actions taken before the TCO's effective date (subsection 269S(1)).
Under the Customs Act 1901, there are no explicit offences, penalties, or civil or criminal consequences stated for breaches of the TCO provisions. However, non-compliance with the Act’s requirements could potentially lead to legal challenges or disputes regarding the validity of the TCO. The Customs Act 1901 itself contains various penalties for breaches related to customs duties and regulations, although these are not specifically tied to the TCO process. The Act provides for penalties, including fines and imprisonment, for offences such as fraudulent customs declarations or failure to comply with customs regulations. In the context of the TCO, any breach of the conditions set by the CEO in making the order could be subject to the general penalties applicable under the Customs Act.