EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1006895
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.
Borgcraft applied for a TCO in respect of certain dough cutting and interleaving and stacking machines on 08 February 2010.
Instrument
TCO No 1006895 was made on 23 April 2010. It declares that those certain dough cutting and interleaving and stacking 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. 1006895 is taken to have come into force on 08 February 2010.
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, enacted by the Commonwealth Parliament, provides a framework for the administration of customs and excise duties in Australia. One of its key components is the scheme that allows for the issuance of Tariff Concession Orders (TCOs), as outlined in Part XVA of the Act. This scheme aims to provide relief from customs duty on certain imported goods, thereby addressing the gap where businesses may face undue financial burdens due to high tariff rates. The Explanatory Statement for Tariff Concession Instrument No. 1006895 clarifies the process under which the Chief Executive Officer of Customs assesses and approves applications for TCOs, ensuring that the core criteria are met, such as the absence of substitutable goods produced in Australia. In the case of Borgcraft's application for a TCO concerning specific dough cutting and interleaving and stacking machines, the CEO determined that the application met the criteria, leading to the issuance of TCO No. 1006895, which effectively provides a zero rate of duty on these goods, down from the general rate of 5%.
Scope and Application
The Customs Act 1901, as amended, facilitates the issuance of Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs, enabling certain goods to be subject to lower rates of customs duty. The Act applies to any person or entity seeking a TCO for goods not specified in section 269SJ of the Act, which lists goods ineligible for tariff concessions. These concessions are granted when no substitutable goods are produced in Australia, as defined by sections 269C, 269D, 269E, and 269F of the Act. The scope of the Act is national, extending across all jurisdictions within Australia, while its application is managed federally by the CEO. The instrument, Tariff Concession Instrument No. 1006895, specifies that certain dough cutting and interleaving and stacking machines are eligible for a free rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from the date the application was lodged, 08 February 2010. The TCO ensures that the rights of entities other than the Commonwealth are not adversely affected, and importers of these goods can apply for duty refunds for imports since the commencement date of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1006895, made under the Customs Act 1901, establish that the certain dough cutting and interleaving and stacking machines are to be treated as goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies (sections 269C, 269F, 269P(3)). This means these specific machines are exempt from the general duty rate of 5% and are instead subject to a duty rate of free, provided that no substitutable goods were produced in Australia at the time of the application (section 269D, 269E, 269P(3)). The instrument was made on 23 April 2010, following an application by Borgcraft on 08 February 2010, and is deemed to have come into force on the date the application was lodged (subsection 269S(1)).
The Customs Act 1901 imposes several obligations on parties and entities governed by the Act. Firstly, the Chief Executive Officer of Customs (CEO) must ensure that any application for a Tariff Concession Order (TCO) does not pertain to goods specified in section 269SJ of the Act (section 269F). If the CEO is satisfied that the application meets the core criteria set out in section 269C, they are required to make a written order declaring the goods to which the TCO applies (subsection 269P(3)). Additionally, under section 269K, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. In this case, no submissions were received.
In terms of the consequences for breach, the Customs Act 1901 does not explicitly state offences or penalties for non-compliance with the provisions of a TCO. However, the general legal framework surrounding customs and tariff regulations may impose civil or criminal penalties for violations. For example, knowingly or recklessly making a false statement in a customs document or failing to comply with customs regulations can lead to fines or imprisonment under the Customs Act 1901. The specific penalties would depend on the nature and severity of the breach, but they could include significant financial penalties or imprisonment for more severe infractions.