EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0828890
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.
Notleys Pty Ltd applied for a TCO in respect of certain bakery ovens on 28 August 2008.
Instrument
TCO No 0828890 was made on 21 November 2008. It declares that those certain bakery ovens 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. 0828890 is taken to have come into force on 28 August 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 Australian Parliament, establishes a framework for the application of customs duties on imported goods. To address gaps in the tariff system and provide relief to specific industries or sectors, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs). These orders provide for lower rates of customs duty on specified goods, contingent on certain conditions being met. TCOs are issued by the Chief Executive Officer of Customs, who must ensure that the application for concession does not pertain to goods that are explicitly excluded from such concessions and that the goods in question do not have Australian-made substitutes. The policy objective underpinning this legislative measure is to support Australian industries by reducing the cost of imported goods, thereby making them more competitive. The explanatory statement for Tariff Concession Instrument No. 0828890, issued on 21 November 2008, details a specific instance where certain bakery ovens were granted a tariff concession, reducing their duty rate to zero. This measure was introduced to alleviate the financial burden on businesses importing these essential pieces of equipment and to encourage the use of imported goods where local production is not viable or competitive.
Scope and Application
The Customs Act 1901, under Part XVA, governs the process through which Tariff Concession Orders (TCOs) can be established by the Chief Executive Officer of Customs (CEO). This legislation applies to any person who may apply for a TCO concerning goods, provided that these goods do not fall under the categories specified in section 269SJ, which are ineligible for tariff concessions. The application process necessitates that the CEO determines if the goods for which a TCO is sought are not substitutable by goods produced in Australia in the ordinary course of business, as defined by sections 269D, 269E, and 269F. Once the core criteria are satisfied, a TCO can be issued, resulting in the application of a reduced or free rate of customs duty to the specified goods. The geographic reach of this Act is national, as it applies across all states and territories within Australia. The Act allows for the extension or restriction of its application through subordinate instruments, which may include regulations or other legislative instruments. Notably, the rights of third parties, other than the Commonwealth, are preserved under the Act, ensuring that the concession does not disadvantage anyone or impose liabilities for actions taken prior to the issuance of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0828890 include sections 269F, 269C, 269B, and 269P of the Customs Act 1901. Section 269F allows for applications to be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the CEO is satisfied that the application is valid and meets the core criteria outlined in section 269C, they must make a TCO. Section 269B defines the terms used in the core criteria, such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. Section 269P(3) requires the CEO to make a written order if they are satisfied that the application meets the core criteria. TCO No. 0828890, made on 21 November 2008, declares that certain bakery ovens are subject to a TCO, applying item 50 of Schedule 4 to the Customs Tariff Act 1995, which sets the duty rate at free, down from the general rate of 5%.
The Customs Act 1901 imposes specific obligations and requirements on the parties involved in the TCO process. The CEO must ensure that the application for a TCO does not relate to goods specified in section 269SJ of the Act, which cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written TCO. Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. In this case, the CEO did not receive any submissions in response to the published notice.
Failing to comply with the requirements of the Customs Act 1901 can result in both civil and criminal consequences. Although the explanatory statement does not detail specific penalties, breaches of the Customs Act can generally lead to fines, imprisonment, or both, depending on the severity of the offence. For instance, under section 244 of the Act, a person who knowingly makes a false statement or representation in an application for a TCO can be subject to civil penalties, including fines, and criminal penalties, such as imprisonment. Similarly, under section 245, a person who wilfully contravenes the Act or Regulations can face fines and imprisonment.
The Tariff Concession Instrument No. 0828890 ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the TCO. Specifically, the TCO does not impose any liabilities on any person in respect of actions taken before the TCO's registration date. Importers benefit from the TCO as they can apply for a refund of duty on goods imported since the TCO is taken to have come into force on 28 August 2008, under paragraph 126(1)(r) of the Regulations. This provision ensures that the TCO is designed to provide relief to importers without imposing new burdens or liabilities on any party.