EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1103367
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.
Camfil Farr Australia Pty Ltd applied for a TCO in respect of certain biohazard testing machines on 21 January 2011.
Instrument
TCO No 1103367 was made on 18 April 2011. It declares that those certain biohazard testing 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. 1103367 is taken to have come into force on 21 January 2011.
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, establishes a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). These TCOs provide for a reduced rate of customs duty on specified goods. The purpose of this legislation, as illustrated in Tariff Concession Instrument No. 1103367, is to address the issue of applying for tariff concessions on goods that do not have substitutable alternatives produced domestically. In this case, Camfil Farr Australia Pty Ltd applied for a TCO concerning certain biohazard testing machines, which the CEO approved after determining that no equivalent goods were manufactured in Australia. This concession led to these specific machines being subject to a zero rate of duty, down from the general rate of 5%. The instrument, which came into force on the date of the application, 21 January 2011, ensures that the rights of importers are positively impacted, allowing them to apply for duty refunds on imports since the effective date of the concession.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCOs) mechanism under Part XVA, applies to any person or entity wishing to import goods for which a lower rate of customs duty is sought. This Act primarily concerns the importation of goods into Australia and the associated duty reductions that can be applied under specific circumstances. The TCO process allows for the reduction or exemption of customs duty on goods that are not substitutable by goods produced in Australia. The application for a TCO is directed to the Chief Executive Officer of Customs (CEO), who assesses whether the application meets the core criteria outlined in the Act. If the CEO determines that the application is valid and meets the criteria, a TCO is issued, effectively reducing or eliminating the customs duty on the specified goods. The scope of this Act is geographically confined to Australia, and its application is not restricted by state or territory boundaries. However, it does not apply to goods listed in section 269SJ of the Act, which are explicitly excluded from tariff concessions. The Act allows for the application to be extended or restricted through subordinate instruments, ensuring flexibility in its implementation. The Explanatory Statement for TCO No. 1103367 details a specific case where Camfil Farr Australia Pty Ltd successfully applied for tariff concessions on certain biohazard testing machines, resulting in a reduction of the duty rate from 5% to free.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the procedures for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). Section 269F permits a person to apply to the CEO for a TCO for certain goods, provided they are not specified in section 269SJ, which lists goods ineligible for TCOs. The CEO must then assess whether the application meets the core criteria stipulated in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged. The definitions for key terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, they must issue a written TCO, as mandated by subsection 269P(3).
Entities and individuals subject to the Act are required to ensure that any applications for TCOs comply with the core criteria. The CEO must also follow the statutory requirement to publish a notice in the Gazette inviting submissions from any interested parties, as outlined in subsection 269K(1). This ensures transparency and provides an opportunity for any objections to be raised before the TCO is issued. In the case of TCO No. 1103367, the CEO did not receive any submissions, indicating no objections were raised. Additionally, the TCO's commencement date is aligned with the date the application was lodged, as specified in subsection 269S(1).
Failure to comply with the requirements of the Customs Act 1901 or the conditions set out in a TCO can lead to various consequences. While the Act does not explicitly outline offences or penalties within this specific context, breaches of the broader Customs Act provisions can result in both civil and criminal penalties. Civil penalties may include fines, while criminal penalties can include imprisonment, depending on the nature and severity of the breach. The specific penalties are detailed in other sections of the Customs Act and related legislation. Importers can also benefit from the TCO by applying for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person, ensuring that only the rights of the Commonwealth and importers are affected.