EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112266
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.
Plastic Technology applied for a TCO in respect of certain breeding boxes on 12 April 2011.
Instrument
TCO No 1112266 was made on 29 August 2011. It declares that those certain breeding boxes 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. 1112266 is taken to have come into force on 12 April 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 Commonwealth Parliament, addresses the need for tariff concession mechanisms to foster trade and economic efficiency. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can lower the customs duty on certain goods. This was introduced to address the economic disadvantage faced by industries that rely on imported goods where no suitable domestic alternatives exist. The policy objective is to ensure that Australian businesses remain competitive and that consumers benefit from lower prices without compromising the revenue of the Commonwealth. Tariff Concession Instrument No. 1112266, made on 29 August 2011, is an example of this mechanism in action, providing a duty-free rate on specific breeding boxes, which was determined to have no substitutable goods produced in Australia, thereby benefiting the rights of importers and potentially lowering costs for end-users.
Scope and Application
The Customs Act 1901, through Part XVA, provides a mechanism for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) which apply lower rates of customs duty to specified goods. This process applies to any person who may apply for a TCO under section 269F, provided that the goods in question are not those specified in section 269SJ, which are ineligible for tariff concessions. For an application to be considered, it must meet the core criteria stipulated in sections 269C, 269D, 269E, and 269P of the Act, primarily ensuring that no substitutable goods are produced in Australia at the time the application is lodged. Once the CEO determines that an application meets these criteria, they must issue a written TCO as per section 269P(3). The TCO then applies to the specified goods as outlined in Schedule 4 of the Customs Tariff Act 1995. The instrument in question, TCO No. 1112266, granted to Plastic Technology on 29 August 2011, applies a zero rate of duty to certain breeding boxes, effective from 12 April 2011, the date the application was lodged. This order does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person, instead providing potential benefits to importers who may apply for duty refunds under the Customs Act Regulations.
Key Provisions
The main operative sections of this legislation are sections 269C, 269F, and 269P of the Customs Act 1901, which together provide the framework for making Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided these goods are not specified in section 269SJ, which excludes certain goods from being subject to a TCO. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This means that the goods will be subject to a lower rate of customs duty or, in some cases, a free rate as specified in the Tariff.
The obligations and requirements imposed by this Act on the parties it governs primarily revolve around the application process for a TCO. An applicant must ensure their application is valid and meets all core criteria as stipulated in section 269C. This includes demonstrating that no substitutable goods are produced in Australia at the time the application is lodged. The CEO must then assess the application and, if satisfied, make a written order. Additionally, as per subsection 269K(1), the CEO is required to publish a notice in the Gazette, inviting any interested parties to submit objections to the TCO within a specified period. In the case of TCO No. 1112266, no submissions were received, which facilitated the smooth issuance of the order.
Any breaches of the conditions or requirements set forth in the Customs Act 1901 may result in both civil and criminal consequences. While the explanatory statement does not detail specific penalties for breaches related to TCOs, it is pertinent to note that the general provisions of the Customs Act may apply. Under the Act, breaches can lead to fines or imprisonment, depending on the severity of the offence. For example, knowingly making a false statement in connection with a duty drawback claim can result in a fine of up to $11,000 or imprisonment for up to two years, or both, under section 238D. These penalties underscore the importance of compliance with the Act’s provisions to avoid severe repercussions.