EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1039873
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 applied for a TCO in respect of certain food processing streaming and aligning systems on 30 August 2010.
Instrument
TCO No 1039873 was made on 15 November 2010. It declares that those certain food processing streaming and aligning systems 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. 1039873 is taken to have come into force on 30 August 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 was enacted to facilitate the administration of customs duties and provide a framework for tariff concessions. This Act addresses the problem of applying lower customs duty rates to specific goods under certain conditions. Tariff Concession Orders (TCOs) are a mechanism under Part XVA of the Act, allowing the Chief Executive Officer of Customs to reduce duty rates on imported goods if no substitutable goods are produced in Australia. The Explanatory Statement for Tariff Concession Instrument No. 1039873 outlines the application and approval process for a TCO for certain food processing systems by McCain Foods. The CEO assessed the application against the core criteria and determined that no substitutable goods were produced in Australia, leading to the grant of a TCO that exempts these goods from the usual customs duty of 5%, making them duty-free. The instrument was published in the Gazette with an invitation for objections, none of which were received. The TCO came into effect on the date the application was lodged, 30 August 2010, and it does not adversely affect existing rights or impose new liabilities.
Scope and Application
The Tariff Concession Instrument No. 1039873, made under Part XVA of the Customs Act 1901, applies to certain food processing streaming and aligning systems imported into Australia. The instrument was created in response to an application by McCain Foods, who sought a tariff concession order (TCO) for these systems. The application process involves the Chief Executive Officer of Customs (CEO) determining if the goods are not substitutable by Australian-produced goods and if they meet the core criteria set out in the Act. In this instance, the CEO found that no substitutable goods were produced in Australia, leading to the issuance of the TCO which grants a concession from the general customs duty rate of 5% to a rate of free. The TCO does not retroactively affect any rights or impose liabilities on importers or other persons, although it does entitle importers to apply for a refund of duty paid on imports since the TCO's effective date of 30 August 2010. The application process includes a requirement for the CEO to invite and consider submissions from any interested parties, although none were received in this case. The TCO is effective from the date the application was lodged and extends to the goods specified in the instrument.
Key Provisions
The Tariff Concession Instrument No. 1039873 under the Customs Act 1901 (section 269F) concerns the granting of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for certain food processing streaming and aligning systems. A TCO allows for a lower rate of customs duty on goods specified in the order. For instance, in this case, the general rate of duty on these goods is reduced to free of charge (section 269P(3)). This provision is contingent on the CEO determining that no substitutable goods are produced in Australia at the time the application is lodged (section 269C). The TCO was issued after McCain Foods applied for it on 30 August 2010, and it came into effect on the same date (section 269S(1)). This means that importers can benefit from the reduced duty rate for goods imported from the effective date of the TCO.
The Act imposes several obligations on parties involved in the TCO process. Firstly, applicants such as McCain Foods must ensure their applications meet the core criteria outlined in the Act, specifically that no substitutable goods are produced in Australia (section 269C). The CEO is mandated to review these applications and determine if they meet the criteria. If satisfied, the CEO must make a written TCO order (section 269P(3)). Additionally, 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 (subsection 269K(1)). In this instance, no submissions were received. The CEO's role is crucial in ensuring the process is transparent and fair, allowing interested parties to voice their concerns.
Failure to comply with the provisions of the Customs Act 1901 can result in various consequences. While the explanatory statement does not specify penalties for breaches related to TCOs, general provisions under the Act may apply. For example, knowingly making a false statement in an application or document can lead to criminal charges, with penalties including fines and imprisonment. The specifics of these penalties can vary depending on the nature and severity of the offence, but they underscore the importance of accurate and truthful information in applications for tariff concessions.
In summary, the Tariff Concession Instrument No. 1039873 provides for a tariff concession on certain food processing streaming and aligning systems, reducing the customs duty rate from 5% to free. The process involves the CEO reviewing applications to ensure they meet the core criteria, publishing notices in the Gazette to allow for public input, and issuing orders accordingly. Failure to comply with the Act's provisions can result in criminal penalties, highlighting the seriousness with which the law treats compliance with customs regulations.