EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0946750
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.
John Deere applied for a TCO in respect of certain cotton harvester bale wrapping polyethylene film on 2 December 2009.
Instrument
TCO No 0946750 was made on 26 February 2010. It declares that those certain cotton harvester bale wrapping polyethylene film 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. 0946750 is taken to have come into force on 2 December 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 amended to include the Tariff Concession Orders (TCO) scheme under Part XVA. This scheme allows the Chief Executive Officer of Customs to reduce customs duties on certain goods if no substitutable goods are produced in Australia. This initiative was introduced to address the economic and competitive disadvantages faced by Australian businesses when importing specific goods, thereby encouraging trade and supporting local industries. The Parliament of Australia enacted this provision to facilitate a more flexible and responsive customs regime. The policy objective behind this legislation is to ensure that Australian businesses are not unfairly disadvantaged by high customs duties, thus fostering a competitive market environment that supports both local production and import activities. The scheme is designed to be transparent and inclusive, inviting public submissions on proposed TCOs, as mandated by the Act.
Scope and Application
The Customs Act 1901 applies to persons and entities seeking tariff concessions on imported goods, particularly those who may apply to the Chief Executive Officer of Customs for a Tariff Concession Order (TCO). This Act encompasses the procedure for applying and assessing the eligibility of goods for lower rates of customs duty, which is applicable nationally across Australia. A TCO is granted if the CEO determines that no substitutable goods are produced in Australia, as per the core criteria outlined in section 269C of the Act. The application process includes publishing a notice in the Gazette to allow for any objections, although in the case of TCO No. 0946750 concerning certain cotton harvester bale wrapping polyethylene film, no submissions were received. The TCO is effective from the date of the application, in this instance, 2 December 2009, and it exempts the specified goods from the general rate of duty, instead applying a free rate. The TCO does not affect existing rights or impose new liabilities on persons other than the Commonwealth, and it allows for the potential refund of duties on goods imported since the commencement date. The scope and application of the TCO are further defined through the subordinate Customs (Tariff Concession Orders) Rules 1999.
Key Provisions
The main operative sections of the Customs Act 1901, particularly as they relate to Tariff Concession Orders (TCOs), require that applications for a TCO must be made to the Chief Executive Officer of Customs (CEO) (section 269F). If the CEO determines that the application pertains to goods not specified in section 269SJ of the Act, which excludes certain goods from TCO eligibility, the CEO must then assess whether the application meets the core criteria (section 269C). The core criteria require that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269P(3) of the Act, respectively.
Obligations under the Act require that the CEO, upon accepting an application as valid, must publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to submit their views to the CEO (subsection 269K(1)). This ensures transparency and provides an opportunity for interested parties to voice any objections. In the case of TCO No. 0946750, which concerns certain cotton harvester bale wrapping polyethylene film, the CEO did not receive any submissions in response to the published notice. The Act further stipulates that a TCO is considered to have come into force on the day the application was lodged (subsection 269S(1)). In this instance, TCO No. 0946750 is deemed to have come into effect on 2 December 2009, the date the application was made.
In terms of consequences for breach, the Customs Act 1901 does not explicitly outline specific offences, penalties, or civil/criminal consequences for failing to comply with the Act's requirements regarding TCOs. However, the Act does ensure that the TCO does not affect the rights of any 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 (subsection 269S(2)). For importers, this means that they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations. The Act ensures that the rights of importers will be beneficially affected, while also safeguarding against any retroactive liabilities or disadvantages.