EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0903707
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.
Warrnambool Cheese And Butter Factory applied for a TCO in respect of certain sludge storage covers on 04 February 2009.
Instrument
TCO No 0903707 was made on 08 May 2009. It declares that those certain sludge storage covers 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. 0903707 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, including the imposition of tariffs on imported goods. One specific provision within the Act, addressed in the Tariff Concession Instrument No. 0903707, allows for the application of lower rates of customs duty on certain goods through the mechanism of Tariff Concession Orders (TCOs). This particular legislation was introduced to address the gap in providing tariff relief to specific goods that do not have substitutable alternatives produced in Australia, thereby encouraging trade and supporting Australian industries by making certain imported goods more competitively priced. The Instrument No. 0903707 was developed under the authority of the Customs Act 1901 by the Chief Executive Officer of Customs, following the application by Warrnambool Cheese and Butter Factory for a TCO concerning sludge storage covers, and was designed to meet the core criteria set out in the Act. The policy objective is to facilitate trade by reducing the duty on specific imported goods, thus enhancing economic efficiency and supporting Australian businesses where local production of substitutable goods does not exist.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the application of tariff concession orders (TCOs) to goods specified by the Chief Executive Officer of Customs (CEO). This scheme applies to entities or individuals who apply for a TCO for specific goods, provided these goods are not listed in section 269SJ of the Act, which identifies goods ineligible for tariff concessions. The CEO assesses applications against core criteria, notably whether substitutable goods are produced in Australia in the ordinary course of business, as per sections 269C and 269F. If the criteria are met, the CEO issues a TCO, reducing the duty on specified goods, as demonstrated in Tariff Concession Instrument No. 0903707 for sludge storage covers, which were granted a zero duty rate from the general 5%. The geographic scope of the Act is national, and the TCO mechanism extends its application. Any exclusions or exemptions are explicitly defined within the Act, ensuring clarity on eligibility for tariff concessions.
Key Provisions
The Customs Act 1901 provides a framework for the application and administration of customs duty, including the ability for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) as outlined in sections 269F to 269SJ. Specifically, section 269F allows a person to apply for a TCO in respect of goods, while section 269C stipulates that such an application meets the core criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This criterion is further defined by sections 269D, 269E and 269F, which detail the meaning of "goods produced in Australia", "ordinary course of business" and "substitutable goods", respectively. If the CEO determines that the application meets these criteria, they must issue a written TCO under section 269P(3), specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on the parties by the Act include the requirement for the CEO to publish a notice in the Gazette when accepting a TCO application as valid, as per subsection 269K(1). This notice invites any interested party to lodge a submission if they believe the TCO should not be made. In this instance, no submissions were received. Additionally, under subsection 269S(1), the TCO is deemed to have come into force on the day the application was lodged, which in this case was 04 February 2009. The TCO ensures that the rights of individuals, other than the Commonwealth, are not adversely affected by its implementation, and it does not impose any liabilities on any person.
Breaching the requirements of the Customs Act 1901, including the improper application or misuse of a TCO, can result in various civil or criminal consequences. While the explanatory statement does not specify particular offences or penalties, it is likely that such breaches would fall under the general provisions of the Customs Act, which can include fines and imprisonment. The exact penalties would depend on the specific nature of the breach and the provisions of the Customs Act 1901 that are contravened. The TCO itself, by ensuring that no substitutable goods were produced in Australia in the ordinary course of business, aims to maintain the integrity of the tariff concession scheme and avoid any potential for abuse or circumvention of customs duties.