EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1107045
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.
KHS Pacific applied for a TCO in respect of certain filling and sealing machines on 22 February 2011.
Instrument
TCO No 1107045 was made on 16 May 2011. It declares that those certain 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. 1107045 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 Parliament of Australia, established a framework for the regulation of customs duties and tariffs. One of the mechanisms introduced under this Act is the Tariff Concession Order (TCO), which allows for the reduction or elimination of customs duty on certain goods, subject to specific criteria. This legislative instrument was introduced to address the need for targeted tariff reductions that can support industry development and economic competitiveness by lowering the cost of imported goods that do not have Australian-made alternatives. The Tariff Concession Instrument No. 1107045, made on 16 May 2011, is an example of this mechanism in action, as it granted a tariff concession to KHS Pacific for certain filling and sealing machines, effectively reducing the duty on these goods from 5% to free. This instrument was made following an application by KHS Pacific and after satisfying the core criteria under the Customs Act, including the absence of substitutable goods produced in Australia.
Scope and Application
The Tariff Concession Instrument No. 1107045, made under section 269F of the Customs Act 1901, applies to the importation of specific filling and sealing machines and aims to provide tariff concessions on these goods. This legislation applies to entities and individuals importing these machines, with the effect of reducing the customs duty from the general rate to zero, provided the machines are not substitutable goods produced in Australia. The scope of this Act is federal, applying across the Commonwealth of Australia. It is important to note that this instrument does not apply to goods specified in section 269SJ of the Act, which lists goods that cannot be subject to a tariff concession order. The application of this Act can be extended or restricted through subordinate instruments, although this specific instrument does not indicate any further modifications. The instrument came into effect on the date the application was lodged, 22 February 2011, without affecting the rights of any person in respect of actions taken prior to this date.
Key Provisions
The Customs Act 1901, particularly under Part XVA, allows the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. If a person wishes to apply for a TCO, they must do so under section 269F. The CEO must then determine whether the application is for goods that cannot be subject to a TCO, as specified in section 269SJ. If the CEO is satisfied that the application is for eligible goods, they must assess whether it meets the core criteria set out in section 269C, which requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.
The Act imposes obligations on the CEO to carefully assess TCO applications, ensuring that the criteria are met before making an order. The CEO must also publish a notice in the Gazette under section 269K(1) inviting any interested party to submit reasons why the TCO should not be made. In the case of Tariff Concession Order No. 1107045, the CEO was satisfied that the application met the core criteria, and no submissions were received opposing the order. The TCO came into force on the day the application was lodged, which is 22 February 2011.
Failure to comply with the requirements of the Customs Act 1901 in relation to TCOs could result in civil or criminal penalties. However, the explanatory statement does not detail specific offences or penalties for breaches of the Act or the TCO. Importers who benefit from the TCO can apply for a refund of duty on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations. The TCO itself does not impose any liabilities on any person, ensuring that no one is disadvantaged or unfairly burdened by the order.