EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0831427
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.
Tooheys Pty Ltd applied for a TCO in respect of certain bottle rinsing machine on 16 September 2008.
Instrument
TCO No 0831427 was made on 05 December 2008. It declares that those certain bottle rinsing machine 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. 0831427 is taken to have come into force on 16 September 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 imposition of customs duties on imported goods. This Act facilitates the creation of Tariff Concession Orders (TCOs), which provide for reduced or waived customs duties on specified goods. TCO No. 0831427, introduced to address the specific needs of Tooheys Pty Ltd concerning their bottle rinsing machines, exemplifies this framework in action. The objective of this instrument is to ensure that no substitutable goods are produced domestically, thereby allowing for the concession to be applied without undermining local industries. The Tariff Concession Order was published in the Gazette and, after no objections were raised, it was issued, resulting in a duty rate of zero on the specified machines, down from the standard 5%. This order aims to benefit importers by allowing them to seek refunds for duties already paid on these machines since the effective date of the concession.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to certain goods. These orders are applicable to specific goods that are not produced in Australia in the ordinary course of business and for which an applicant can demonstrate a need for tariff concessions. The Act applies to individuals and entities that seek tariff concessions for importing goods, primarily impacting industries that rely on the importation of specific machinery or equipment not locally produced. The geographic reach of this legislation is national, as it operates under the Commonwealth's authority. However, it excludes certain goods as specified in section 269SJ of the Act, such as those that are considered harmful or non-compliant with Australian standards. The application and scope of the Act may be further defined and extended through subordinate instruments, although the primary legislation outlines the core criteria and process for making TCOs.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in relation to Tariff Concession Orders (TCOs), are sections 269C, 269F, and 269P (subsection 3). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO is satisfied that the application meets the core criteria, as outlined in section 269C, and that the goods are not specified in section 269SJ, 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 applies. The TCO specifies the new rate of customs duty applicable to the goods, which can be free or reduced.
The Act imposes specific obligations and requirements on both the applicant and the CEO. The applicant must ensure their application for a TCO meets the core criteria, which involves demonstrating that no substitutable goods are produced in Australia in the ordinary course of business. The CEO must then review the application, determine if the core criteria are met, and if so, publish a notice in the Gazette inviting any interested party to make a submission. If no submissions are received, the CEO must proceed to make the TCO. The TCO application and its acceptance must be handled in a manner that ensures transparency and allows for any objections to be voiced.
Failure to comply with the provisions of the Customs Act 1901 in relation to TCOs can result in civil or criminal consequences. While the specific penalties for breaches are not detailed in the Explanatory Statement, under Australian law, breaches of customs regulations can result in substantial fines and, in some cases, imprisonment. The exact penalties depend on the nature and severity of the breach, but they can be severe, reflecting the importance of compliance with customs regulations to ensure fair trade practices and revenue collection.
The Tariff Concession Order No. 0831427, effective from 16 September 2008, declared that certain bottle rinsing machines are subject to a 0% duty rate, rather than the general rate of 5%. This concession was granted because the CEO was satisfied that no substitutable goods were produced in Australia. The order also specifies that it does not affect any rights or liabilities accrued before its effective date. Importers of these machines can apply for a refund of duty paid on imports since the date the TCO was taken to have come into force. This order is an example of how the Act facilitates tariff concessions to promote trade and industry development by reducing the duty on specific goods.