EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1106940
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.
Visy Industries Australia Pty Ltd applied for a TCO in respect of certain solid waste fuel processing plant silo, rotating levellers on 22 February 2011.
Instrument
TCO No 1106940 was made on 23 May 2011. It declares that those certain solid waste fuel processing plant silo, rotating levellers 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. 1106940 is taken to have come into force on 22 February 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 for the administration of customs and excise, including the ability to make Tariff Concession Orders (TCOs) that provide for reduced customs duty on certain imported goods. The problem this legislation addresses is the potential for economic inefficiency and trade barriers caused by high tariffs on goods for which there is no domestic production or viable substitute. The purpose of this particular Tariff Concession Order, No. 1106940, was to provide tariff relief for certain solid waste fuel processing plant silo, rotating levellers, which the Chief Executive Officer of Customs determined were not substitutable with goods produced in Australia. This was done to encourage the importation of these specific goods, thereby potentially lowering costs for businesses and consumers and facilitating the operation of businesses that rely on these imported items. The policy objective is to ensure that Australian businesses have access to necessary imported goods without the burden of excessive customs duties, thus supporting economic activity and potentially lowering prices for end consumers.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, allowing for a lower rate of customs duty on certain goods. The application of this Act extends to any person who applies for a TCO, provided the goods in question are not specified as ineligible under section 269SJ of the Act. The Act mandates that a TCO application is considered valid if, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, and 269E of the Act. Once the CEO is satisfied that the application meets these criteria, a written order is made, declaring the goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby reducing the duty rate. The TCO No. 1106940, made on 23 May 2011, exemplifies this process by granting a free duty rate to certain solid waste fuel processing plant silo, rotating levellers, which were not produced in Australia at the time of the application. The Act’s jurisdictional reach is national, applying across Australia as a Commonwealth Act, with no reported submissions challenging the TCO. The commencement of the TCO aligns with the date the application was lodged, providing immediate effect from that date.
Key Provisions
The primary operative sections of this legislation are sections 269F, 269C, 269B, 269D, 269E, 269P(3), and 269K(1) of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) concerning specific goods. If the application is deemed valid, the CEO must assess whether it meets the core criteria outlined in section 269C, which include the absence of substitutable goods produced in Australia at the time of application. Definitions of key terms such as 'substitutable goods', 'goods produced in Australia', and 'ordinary course of business' are provided in sections 269B, 269D, and 269E, respectively. If the application satisfies these criteria, the CEO is required by section 269P(3) to issue a written TCO. Furthermore, section 269K(1) mandates that the CEO publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not proceed.
The obligations imposed by this Act on the parties involved are primarily centred on the application and assessment process for TCOs. The applicant must ensure their application complies with the criteria outlined in the Act, particularly demonstrating that no substitutable goods were produced in Australia. The CEO, upon receiving a valid application, must thoroughly assess the application against the specified criteria and make a decision based on the evidence provided. Additionally, the CEO is required to publish a notice in the Gazette, as stipulated in section 269K(1), to allow for any objections or submissions from interested parties. This transparency ensures that the process is fair and allows stakeholders to voice any concerns they may have regarding the proposed concession.
Breaching the requirements or obligations outlined in the Customs Act 1901 can result in significant consequences. If an application for a TCO is found to be fraudulent or misleading, it could lead to penalties under the relevant sections of the Act. Although the Explanatory Statement does not specify maximum penalties, breaches of customs legislation generally attract substantial fines and potential criminal charges. For instance, providing false information to obtain a TCO could be considered an offence under section 238 of the Customs Act 1901, which deals with fraud and false statements. Penalties for such offences can include fines of up to $22,200 for individuals and significantly higher amounts for corporations, along with potential imprisonment terms. The severity of these penalties underscores the importance of compliance with the Act's requirements.