EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0903692
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.
Manildra Flour Mills applied for a TCO in respect of certain centrifuge parts on 04 February 2009.
Instrument
TCO No 0903692 was made on 01 May 2009. It declares that those certain centrifuge 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. 0903692 is taken to have come into force on 04 February 2009.
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 a comprehensive framework for the regulation of customs and excise in Australia, and one of its provisions under Part XVA allows for Tariff Concession Orders (TCOs). These orders provide a lower rate of customs duty on specified goods, subject to certain criteria. The Tariff Concession Instrument No. 0903692, introduced on 1 May 2009, is an example of such an order. It was introduced to provide a tariff concession for certain centrifuge parts applied for by Manildra Flour Mills, reducing the duty on these goods from 5% to free. The instrument was developed following an application to the Chief Executive Officer of Customs, who was satisfied that no substitutable goods were produced in Australia. The instrument came into force on the date the application was lodged, 4 February 2009, and no objections were received during the consultation period. The policy objective is to ensure that the tariff concessions do not disadvantage any person or impose liabilities on any person in respect of actions taken before the registration of the order.
Scope and Application
The Customs Act 1901, as amended, provides a framework under which Tariff Concession Orders (TCOs) may be issued, aimed at facilitating trade by reducing customs duties on specific goods. The Act applies to any person or entity that seeks a reduction in customs duties on goods by applying for a TCO, and it extends to the geographic jurisdiction of Australia. The application of the Act is limited by exclusions specified in section 269SJ, which includes goods that cannot be subject to a TCO. The core criteria for approving a TCO application are detailed in sections 269C and 269D, focusing on the production status of substitutable goods within Australia. Once the CEO is satisfied that the application meets the core criteria, a written order is made, and the concession applies retroactively to the date the application was lodged, as outlined in subsection 269S(1). The Act also ensures that the rights of importers are positively impacted by such orders, allowing them to apply for duty refunds on goods imported since the effective date of the TCO, without imposing new liabilities on any person.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0903692, made under the Customs Act 1901, pertain to the establishment of Tariff Concession Orders (TCOs) (s 269F). Specifically, section 269C of the Act outlines that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This determination is crucial as it sets the basis for the concessionary tariff rate applied to the goods in question. Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must issue a written order (TCO) declaring the applicable prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties governed by it are multifaceted. The CEO of Customs is required to assess applications for TCOs against the criteria specified in section 269C and to make a written order if the criteria are met (s 269P(3)). Additionally, section 269K(1) mandates that the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission. Failure to publish such a notice or to consider submissions would be a breach of the Act. Furthermore, the Act ensures that 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 (s 269S(1)).
Any breach of the conditions set out by the Customs Act 1901 can lead to significant consequences. While the Act does not specify particular offences, penalties, or civil/criminal consequences for breach of TCO provisions, general contraventions of the Customs Act can attract severe penalties. For instance, section 253 of the Act provides that a person who contravenes any provision of the Act is liable to a penalty of up to 10,000 penalty units or imprisonment for five years, or both, for each offence. Additionally, civil penalties can also apply under section 256 of the Act for breaches of certain customs-related obligations, with penalties that can amount to substantial financial fines.
In summary, Tariff Concession Instrument No. 0903692, made under the Customs Act 1901, provides for the establishment of TCOs that grant tariff concessions to specified goods, provided certain criteria are met. The CEO of Customs has the responsibility to assess applications and publish notices in the Gazette, ensuring transparency and opportunity for public input. The Act ensures that the rights of persons other than the Commonwealth are protected, and it imposes significant penalties for breaches of its provisions, reinforcing compliance and adherence to its stipulated conditions.