EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0909174
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.
Tiger Coffee Pty Ltd applied for a TCO in respect of certain coffee machines on 18 March 2009.
Instrument
TCO No 0909174 was made on 5 June 2009. It declares that those certain coffee machines 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. 0909174 is taken to have come into force on 18 March 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 Tariff Concession Instrument No. 0909174, enacted under the Customs Act 1901, addresses the need for tariff concessions to be granted to importers of specific goods when no substitutable goods are produced domestically. This legislation was introduced to provide relief to importers by allowing the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs), which effectively reduce the customs duty on certain imported goods to zero. The instrument was enacted by the Australian government and aims to facilitate trade by lowering the cost of importing goods that are not produced locally. The explanatory statement notes that the instrument came into effect on the date the application was lodged, in this case, 18 March 2009, and does not retroactively disadvantage any party or impose new liabilities.
Scope and Application
The Customs Act 1901 provides a framework through which the Chief Executive Officer of Customs may make Tariff Concession Orders (TCOs) for certain goods, reducing their customs duty rate to zero. The Act applies to any person or entity wishing to import goods that are not produced in Australia in the ordinary course of business and for which a TCO can be applied. The application process requires the applicant to demonstrate that no substitutable goods are produced in Australia, and the CEO must be satisfied that the application meets the core criteria set out in the Act. The TCO applies to the goods from the date the application was lodged, and it does not affect any pre-existing rights or impose new liabilities on any person other than the Commonwealth. The CEO is required to publish a notice in the Gazette, inviting submissions from interested parties, although no submissions were received for this particular TCO. The scope of the Act is further extended by subordinate instruments, which may provide additional detail or clarification on the application and implementation of TCOs.
Key Provisions
The main operative sections of this legislation concern the making of Tariff Concession Orders (TCOs) under Part XVA of the Customs Act 1901 (section 269C). Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. If the CEO determines that the application is valid and meets the core criteria, they must make a written order (a TCO) that specifies the goods and the applicable rate of duty. This process is designed to lower the rate of customs duty on certain goods if no substitutable goods are produced in Australia in the ordinary course of business (section 269B and 269E).
Under the Customs Act 1901, the CEO must ensure that the application does not involve goods specified in section 269SJ, which cannot be subject to a TCO. Once an application is deemed valid, the CEO must decide whether it meets the core criteria by confirming that no substitutable goods are produced in Australia on the day the application was lodged (section 269C). This involves verifying the definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" as provided in sections 269D, 269E, and 269F respectively. If the application meets these criteria, the CEO must issue a TCO specifying the applicable item from Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
In the case of TCO No. 0909174, the CEO found that the application from Tiger Coffee Pty Ltd for certain coffee machines met the core criteria because no substitutable goods were produced in Australia. Consequently, the CEO issued a TCO effective from 18 March 2009, the date the application was lodged. The TCO specifies that the applicable duty rate for these coffee machines is free, down from the general rate of 5%. Importantly, the TCO does not affect any rights or liabilities of persons other than the Commonwealth regarding actions taken before its registration, and it does not impose any new liabilities on any person.
The Act imposes several obligations and requirements on the parties involved. For the CEO, it is mandatory to assess the validity of the TCO application, ensure it does not pertain to goods listed in section 269SJ, and verify that the core criteria are met. The CEO must also publish a notice in the Gazette inviting any person who might have objections to the TCO to lodge a submission (subsection 269K(1)). Importers, on the other hand, benefit from the TCO as they can apply for a refund of duty on goods imported since the TCO came into force (Regulation 126(1)(r)).
In terms of offences and penalties, the Customs Act 1901 does not explicitly outline penalties for breach of TCO provisions within the provided text. However, general provisions within the Act likely apply, which could include fines or imprisonment for customs-related offences. For instance, section 241 of the Act provides for penalties for false statements or representations, which could indirectly apply if there is any deception in the TCO application process. Although specific penalties for TCO-related breaches are not detailed, any violations of the Act’s customs duty provisions could result in substantial penalties under the broader legislative framework.