EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1056018
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.
Riverland Oilseeds Pty Ltd applied for a TCO in respect of certain horizontal oil seed mill coolers and/or dryers on 23 December 2010.
Instrument
TCO No 1056018 was made on 21 March 2011. It declares that those certain horizontal oil seed mill coolers and/or dryers 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. 1056018 is taken to have come into force on 23 December 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 regulation of imports and exports, including the imposition of customs duties. One of the mechanisms under this Act is the Tariff Concession Order (TCO) system, which allows for the reduction or exemption of customs duties on specific goods under certain conditions. This system was introduced to address the need for tariff relief that could assist Australian businesses in competing effectively in the global market by reducing the cost of imported goods that do not have local substitutes. Tariff Concession Instrument No. 1056018, made on 21 March 2011, is an example of how this system operates. It grants a tariff concession for certain horizontal oil seed mill coolers and/or dryers, reducing the duty rate from the general rate of 5% to free, recognising that these goods do not have substitutable products produced in Australia. This instrument reflects the policy objective of supporting specific industries by lowering their input costs, thereby enhancing their competitiveness without disadvantaging existing stakeholders.
Scope and Application
The Tariff Concession Instrument No. 1056018 applies to the customs duty on certain horizontal oil seed mill coolers and/or dryers, which are goods imported into Australia. This instrument operates under Part XVA of the Customs Act 1901, which allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. A TCO can be applied for by any person, but the CEO must determine if the application meets the core criteria, including that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. This particular TCO was made in response to an application by Riverland Oilseeds Pty Ltd on 23 December 2010 and came into effect on the same day. It provides for these specific goods to be subject to a duty rate of free, whereas the general rate is 5%. The application process requires publication in the Gazette, inviting submissions from any interested parties, although in this case, no submissions were received. The TCO ensures that no existing rights or liabilities are adversely affected by its implementation, and it specifically benefits importers by allowing them to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
Section 269C of the Customs Act 1901 (the Act) specifies the core criteria for the approval of a Tariff Concession Order (TCO). In accordance with this section, a TCO application is eligible if, on the day the application is made, there are no goods that are substitutable to those being applied for, being produced in Australia in the ordinary course of business. The term 'substitutable goods' is defined in section 269D, and 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 subject to the TCO application can be put. If the Chief Executive Officer of Customs (the CEO) is satisfied that the application meets these criteria, the CEO must then make a written order (a TCO) declaring that the goods subject to the application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Tariff Concession Instrument No. 1056018, made on 21 March 2011, declared that certain horizontal oil seed mill coolers and/or dryers are goods to which item 50 of Schedule 4 to the Tariff applies, as no substitutable goods were produced in Australia on the day the application was made.
The Act imposes obligations on the CEO to ensure that the TCO application process is conducted in accordance with the legislative provisions. The CEO must accept a TCO application as valid and publish a notice in the Gazette inviting submissions from any person who believes that the TCO should not be made, as stipulated in subsection 269K(1) of the Act. The CEO must then make a written order if the application meets the core criteria specified in section 269C. The TCO is taken to have come into force on the day the application for the TCO was lodged, as per subsection 269S(1) of the Act. 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.
Breaching the provisions of the Customs Act 1901 may result in criminal or civil penalties. For instance, subsection 233A(1) of the Act states that any person who contravenes a provision of the Act (other than a provision that relates only to an administrative matter) is liable to a penalty of 10,000 penalty units, or if the offence is a continuing one, to a penalty of 10,000 penalty units for each day during which the offence continues. In addition, section 283 of the Act provides that any person who is found guilty of an offence against the Act is liable to imprisonment for a term of up to five years. These penalties apply to any person who contravenes the Act, including the CEO and applicants for TCOs. Failure to comply with the Act or the regulations may also result in civil penalties, such as fines or compensation for damages.