EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1015691
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.
McCain Foods (Aust) Pty Ltd applied for a TCO in respect of certain flighted conveyors on 01 April 2010.
Instrument
TCO No 1015691 was made on 25 June 2010. It declares that those certain flighted conveyors 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. 1015691 is taken to have come into force on 01 April 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 Tariff Concession Instrument No. 1015691 was enacted under the Customs Act 1901 to address the specific needs of McCain Foods (Aust) Pty Ltd, which sought a reduction in customs duty on certain flighted conveyors. This instrument was introduced to provide tariff concessions where no substitutable goods are produced in Australia. The instrument was authorised by the Chief Executive Officer of Customs, who determined that the application met the core criteria stipulated in the Act, specifically that no substitutable goods were produced in Australia at the time the application was lodged. The instrument aims to benefit importers by providing a lower rate of customs duty, in this case, making the duty on the specified goods free, whereas the general rate would have been 5%. The instrument came into force on 1 April 2010, and it ensures that the rights of importers are beneficially affected without imposing any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 1015691 under the Customs Act 1901 applies to McCain Foods (Aust) Pty Ltd and specifically to certain flighted conveyors for which the company has applied for tariff concessions. This instrument operates within the Commonwealth jurisdiction and is designed to reduce the customs duty on the specified goods to zero, as opposed to the general rate of 5%. The scope of this legislation is limited to the particular goods identified in the TCO, and it does not extend to other goods unless they are specifically included in a subsequent order. The application process requires the Chief Executive Officer of Customs to assess whether the goods in question meet the core criteria, which include the absence of substitutable goods produced in Australia. This assessment ensures that the tariff concession does not undermine local production. The instrument is effective from the date the application was lodged, which in this case is 1 April 2010, and does not retroactively affect any transactions or impose liabilities on individuals or entities other than the Commonwealth. Importers of the specified goods will benefit from the tariff concession by potentially applying for a refund of duty paid on imports since the effective date.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Order No. 1015691, declare that certain flighted conveyors are subject to a free rate of duty under the Customs Tariff Act 1995, as opposed to the general rate of 5% (section 269P(3)). This order was made on 25 June 2010, following an application by McCain Foods (Aust) Pty Ltd on 1 April 2010 (section 269F). The CEO of Customs determined that the application met the core criteria because no substitutable goods were being produced in Australia on the date the application was lodged (section 269C).
In terms of obligations and requirements, the Customs Act 1901 mandates that an applicant must ensure that the goods for which they are seeking a tariff concession order are not specified in section 269SJ, which outlines goods that cannot be subject to a tariff concession order (section 269F). The CEO, in turn, is required to assess whether the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia at the time of application (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the specified goods are subject to the prescribed tariff item (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette, inviting any interested parties to submit reasons why the tariff concession should not be granted (subsection 269K(1)).
The legislation also outlines potential consequences for non-compliance or breach of the conditions set forth in the tariff concession order. While the explanatory statement does not explicitly state penalties, breaches of the Customs Act 1901 can typically result in significant financial penalties or other enforcement actions. The exact penalties would depend on the nature and severity of the breach, as determined under the relevant sections of the Customs Act 1901 and the Customs Regulations 1999. For instance, section 126 of the Customs Regulations 1999 provides for the refund of duty under certain conditions, but failure to comply with the conditions of a tariff concession order could potentially lead to civil or criminal penalties as outlined in other sections of the Customs Act 1901.
In summary, Tariff Concession Order No. 1015691 effectively reduces the customs duty on certain flighted conveyors to zero, provided that no substitutable goods are produced in Australia. The CEO is required to follow a specific process to assess and approve these orders, and interested parties have the opportunity to voice their objections. While the explanatory statement does not detail specific penalties for breach, non-compliance with the Customs Act 1901 can lead to substantial financial penalties and other enforcement measures.