EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1009676
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.
Bega Cheese applied for a TCO in respect of certain food wrapping film on 24 February 2010.
Instrument
TCO No 1009676 was made on 07 May 2010. It declares that those certain food wrapping 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. 1009676 is taken to have come into force on 24 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, establishes a framework for the imposition of customs duty on imported goods. Specifically, Part XVA of the Act provides for Tariff Concession Orders (TCOs), which allow the Chief Executive Officer of Customs to grant tariff concessions on certain goods. The Act was introduced to address the need for flexibility in customs duty rates to support economic and trade policies, ensuring that Australian industries can remain competitive. The policy objective is to provide relief from customs duty for goods where no substitutable goods are produced in Australia, thereby supporting local industries and potentially reducing costs for businesses reliant on imported materials. On 7 May 2010, TCO No. 1009676 was made in response to an application by Bega Cheese for tariff concessions on certain food wrapping film, recognising that no substitutable goods were produced domestically and thus meeting the core criteria set out in the Act.
Scope and Application
The Tariff Concession Instrument No. 1009676 applies to goods specifically identified in the instrument, in this case, certain food wrapping film, and pertains to the application of a lower rate of customs duty under the Customs Act 1901. The instrument was created in response to an application by Bega Cheese, which sought tariff concessions for the specified goods. The Act applies to entities or individuals importing these goods into Australia, effectively reducing their customs duty from the general rate of 5% to zero. The application of this instrument is national, applying across the Commonwealth of Australia as it pertains to customs duty governed by federal legislation. Notably, the Act excludes goods listed in section 269SJ from being subject to tariff concession orders, and in this instance, the CEO determined that the application met the core criteria as no substitutable goods were produced in Australia. The instrument does not disadvantage any existing rights of persons other than the Commonwealth and does not impose new liabilities, while potentially offering benefits to importers through duty refunds for goods imported since the effective date of the order.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1009676 under the Customs Act 1901 (section 269F) concern the process and criteria for granting Tariff Concession Orders (TCOs) to lower customs duty rates on specified goods. Section 269C specifies that an application for a TCO meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269B further defines the terms 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. Subsection 269P(3) requires the Chief Executive Officer of Customs (CEO) to make a written order if satisfied that an application meets these core criteria.
Under this legislation, the CEO has the obligation to consider applications for TCOs and determine if the core criteria are met. If the application is valid and the criteria are met, the CEO must issue a TCO (subsection 269K(1)). The CEO is also required to publish a notice in the Gazette inviting any person who may have concerns about the TCO to submit their views. Additionally, section 269S(1) mandates that a TCO is deemed to come into force on the day the application is lodged. The CEO's role includes ensuring the rights of existing importers are not adversely affected and that no new liabilities are imposed on individuals or entities as a result of the TCO.
In terms of offences and consequences, the Act does not explicitly state penalties for non-compliance with the TCO provisions. However, breaches of the Customs Act 1901 can result in civil and criminal penalties. For instance, under section 240 of the Customs Act 1901, a person who contravenes the Act may be liable to a penalty of up to $11,100 for individuals or $55,500 for corporations, along with potential imprisonment terms depending on the severity of the offence. The lack of specific penalties for TCO non-compliance suggests that general Customs Act provisions would apply, underscoring the importance of adhering to the established procedures and criteria.