EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045695
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.
J L Lennard applied for a TCO in respect of certain liquid or paste food container filling and sealing machines on 11 October 2010.
Instrument
TCO No 1045695 was made on 07 January 2011. It declares that those certain liquid or paste food container filling and sealing 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. 1045695 is taken to have come into force on 11 October 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 Australian Parliament, provides a framework for the regulation of customs and excise duties, among other things. The Act was amended to include the provision for Tariff Concession Orders (TCOs) to facilitate trade by reducing the duty on certain goods under specific conditions. The policy objective behind the introduction of TCOs is to encourage the import of goods that are not produced domestically, thereby promoting competition and potentially lowering prices for consumers. The introduction of TCOs addresses the gap in the tariff structure that could otherwise restrict the importation of goods due to higher duty rates, and aims to support industries that rely on imported components or machinery. TCO No. 1045695, made on 7 January 2011, exemplifies this process by granting a tariff concession on certain liquid or paste food container filling and sealing machines, reducing their duty from the general rate of 5% to free, effective from the date of the application, 11 October 2010.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides a mechanism for Tariff Concession Orders (TCOs) that can be applied for by a person to reduce the customs duty on certain goods. A TCO is applicable to goods that are not produced in Australia in the ordinary course of business and for which there are no substitutable goods. The application process involves the Chief Executive Officer of Customs assessing whether the application meets core criteria, such as the absence of Australian-produced substitutable goods. If these criteria are met, the CEO issues a TCO, which specifies the applicable duty rate as outlined in the Customs Tariff Act 1995. The TCO applies to the goods from the date the application was lodged and benefits importers by potentially allowing them to apply for duty refunds on imports made since that date. Notably, the TCO does not affect any existing rights or impose liabilities on individuals or entities, except for the Commonwealth.
Key Provisions
The main operative sections of Tariff Concession Order No. 1045695 under the Customs Act 1901 (sections 269C, 269P(3), and 269S) mandate the procedure for the application and consideration of a Tariff Concession Order (TCO). Section 269C specifies the core criteria that must be satisfied for a TCO to be granted, namely that no substitutable goods are produced in Australia. Section 269P(3) requires that if these criteria are met, the Chief Executive Officer of Customs (CEO) must issue a written TCO. Section 269S dictates that the TCO comes into force on the day the application is lodged. This TCO specifically pertains to certain liquid or paste food container filling and sealing machines, reducing their duty from a general rate of 5% to free.
The obligations imposed by this Act on the parties and entities it governs include the requirement for applicants to ensure that their applications meet the specified core criteria (section 269C). The CEO must then consider the application, publish a notice in the Gazette inviting submissions from any interested parties (subsection 269K(1)), and decide whether to make a TCO if the criteria are satisfied. If the CEO decides to issue a TCO, they must do so in writing (section 269P(3)). Importers, in turn, benefit from the reduced duty rate and can apply for refunds on duties paid prior to the TCO’s effective date (Regulation 126(1)(r)).
Breaching the requirements set out in the Customs Act 1901 can lead to various civil and criminal consequences. While the specific penalties are not detailed in this explanatory statement, breaches of customs regulations generally may result in fines and, in severe cases, criminal prosecution. For instance, knowingly making false statements or providing misleading information in an application could lead to penalties under sections 228 and 229 of the Act, which include fines up to $22,200 for individuals and substantially higher amounts for corporations. Additionally, failure to comply with the TCO’s terms might also result in civil penalties and potential revocation of the concession.