EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0914674
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.
McCormick Foods Australia applied for a TCO in respect of certain grinding mills on 01 May 2009.
Instrument
TCO No 0914674 was made on 24 July 2009. It declares that those certain grinding mills 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. 0914674 is taken to have come into force on 01 May 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 by the Parliament of Australia to manage and regulate the importation and exportation of goods into and out of Australia, among other functions. The introduction of Part XVA within the Customs Act 1901 was to address the need for a streamlined process to provide tariff concessions for specific goods, thereby encouraging trade and economic efficiency. This was achieved through the establishment of a mechanism whereby the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) to reduce or eliminate customs duty on certain goods, provided that no substitutable goods are produced in Australia. The Tariff Concession Instrument No. 0914674, made on 24 July 2009, exemplifies this mechanism by granting McCormick Foods Australia a tariff concession on certain grinding mills, effectively reducing the duty on these goods from 5% to free. The instrument was made following the application process outlined in the Act, which includes a requirement for public consultation, although none was received in this instance. The policy objective underpinning this legislation is to facilitate trade by reducing the cost of imported goods, thereby potentially boosting local industries and consumer access to a broader range of products.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs. This provision allows for a reduced rate of customs duty on goods that are the subject of a TCO, provided the application meets certain criteria. The Act applies to any person or entity that may seek a TCO for goods that are not specified in section 269SJ as ineligible. The process requires that, at the time of application, no substitutable goods are produced in Australia in the ordinary course of business, as outlined in sections 269C and 269D. The geographic reach of this legislation is national, with its application extending across the Commonwealth of Australia. Notably, the Act does not specify exclusions or exemptions beyond those already mentioned, and it does not impose any liabilities on persons other than the Commonwealth. Subordinate instruments may further extend or restrict the application of this Act, providing additional clarity and specific guidelines on the eligibility and implementation of TCOs.
Key Provisions
The primary operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods. The CEO must then determine if the application meets the core criteria, which is defined by sections 269C and 269SJ. Section 269C stipulates that the application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269B, 269D, and 269E respectively. If the CEO is satisfied that the application meets the core criteria, they must make a written order, or TCO, under subsection 269P(3), specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Customs Act 1901 imposes specific obligations on both the CEO and applicants for TCOs. The CEO must ensure that the application meets the core criteria outlined in sections 269C and 269SJ. If the CEO determines that the application meets these criteria, they must publish a notice in the Gazette, inviting any interested parties to submit submissions regarding the application. This process is mandated by subsection 269K(1). Once the CEO has considered any submissions, they must make a written order if the application meets the criteria. The applicant, in turn, must provide all necessary information to support their application and must ensure that the application complies with the statutory requirements, including meeting the core criteria.
Breaching the provisions of the Customs Act 1900, particularly in the context of TCOs, can result in various legal consequences. While the explanatory statement does not detail specific offences or penalties, breaches of the Customs Act can generally lead to civil or criminal penalties, depending on the nature and severity of the breach. Under Australian law, penalties can include fines, imprisonment, or both, depending on the specific breach and the discretion of the court. For example, misleading or false statements made in the course of an application could lead to criminal charges, whereas procedural errors might result in civil penalties. The maximum penalties would depend on the specific breach and applicable laws at the time of the offence.
Tariff Concession Order (TCO) No. 0914674, made on 24 July 2009, declared that certain grinding mills are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995. This TCO was issued following an application by McCormick Foods Australia on 1 May 2009. The CEO was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria as per section 269C. Consequently, the general rate of duty on these goods, which is 5%, was reduced to free under the TCO. The order came into effect on the date the application was lodged, 1 May 2009, as stipulated by subsection 269S(1) of the Act. The TCO does not adversely affect any person's rights as they stood at the date of registration, nor does it impose any liabilities on any person except the Commonwealth.