EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0906322
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.
Cadbury Schweppes applied for a TCO in respect of certain honeycomb confectionery cutting line on 23 February 2009.
Instrument
TCO No 0906322 was made on 15 May 2009. It declares that those certain honeycomb confectionery cutting line 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. 0906322 is taken to have come into force on 23 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 for the regulation of goods imported into Australia, including the imposition of customs duty. One of its components, Part XVA, facilitates the application for Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This part was introduced to address the need for reduced customs duty rates on specific imported goods, provided certain conditions are met. The Tariff Concession Instrument No. 0906322, enacted in 2009, was created to provide tariff concessions for certain honeycomb confectionery cutting lines, following an application by Cadbury Schweppes. The instrument declares that these specific goods are to be subject to a zero-duty rate, effective from the date the application was lodged. The policy objective behind this instrument is to ensure that the rights of importers are beneficially affected, allowing them to apply for refunds on duties paid prior to the effective date of the TCO. This was achieved without imposing any new liabilities on individuals or entities, ensuring the rights of non-Commonwealth persons are preserved.
Scope and Application
The Tariff Concession Instrument No. 0906322 under the Customs Act 1901 applies to a specific set of goods, namely certain honeycomb confectionery cutting lines, and is designed to facilitate their importation by providing a concession on the duty applicable to them. The Act allows for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs, and this particular instrument was created following an application by Cadbury Schweppes on 23 February 2009. The TCO became effective on the date of the application, thereby offering immediate benefits to importers of the specified goods. The instrument ensures that these goods are subject to a reduced rate of duty, from the general rate of 5% to a rate of duty that is free, provided that no substitutable goods are produced in Australia. This concession is contingent on the core criteria being met, specifically that no goods produced in Australia could substitute the imported goods. The TCO does not affect any existing rights or impose new liabilities on any person other than the Commonwealth, and it does not disadvantage anyone by retroactively applying to transactions prior to its registration.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in relation to Tariff Concession Orders (TCOs), are sections 269F, 269C, 269B, 269P, and 269S. Section 269F (1) allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the CEO determines that the application meets the core criteria, they must make a written order (section 269P(3)) that specifies the prescribed item of Schedule 4 to the Customs Tariff Act 1995 applicable to the goods in question. This order effectively lowers the customs duty rate for those goods. The core criteria, as set out in section 269C, require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions of key terms such as ‘goods produced in Australia’, ‘ordinary course of business’ and ‘substitutable goods’ are provided in sections 269D, 269E and 269B respectively.
The obligations imposed on the parties by this Act revolve around the process of applying for and receiving a TCO. The CEO of Customs must consider the application and decide if it meets the core criteria set out in section 269C. The CEO must also publish a notice in the Gazette, inviting any person to lodge a submission if they believe the TCO should not be made (subsection 269K(1)). Additionally, the Act requires the CEO to consider any submissions received and decide whether to proceed with the TCO. Importers who benefit from a TCO may need to apply for a refund of duty on goods imported since the day the TCO came into force (paragraph 126(1)(r) of the Regulations).
The Act does not explicitly outline specific offences, penalties, or consequences for breach in the context of TCOs. However, any failure by the CEO to follow the legislative requirements when processing TCO applications could potentially lead to legal challenges or administrative penalties if found to be in breach of the Act. The potential consequences for non-compliance could include judicial review or administrative action if it is determined that the CEO did not properly adhere to the statutory requirements. The exact penalties would depend on the nature and severity of the breach, but they could include corrective actions, fines, or other administrative sanctions.