EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1115300
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.
Kupie Pty Ltd applied for a TCO in respect of certain pesto processing line on 16 May 2011.
Instrument
TCO No 1115300 was made on 08 August 2011. It declares that those certain pesto processing line 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. 1115300 is taken to have come into force on 16 May 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 was enacted to facilitate the regulation of goods imported into Australia, including the imposition and concession of customs duties. The Act establishes a framework for Tariff Concession Orders (TCOs) under Part XVA, allowing the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain goods if specific criteria are met. This mechanism addresses the problem of ensuring that Australian businesses are not unduly burdened by customs duties on goods for which there are no locally produced substitutes, thus promoting competitiveness and economic efficiency. The policy objective is to provide relief to industries that rely on imported goods that cannot be produced domestically, thereby supporting their operations and potentially lowering costs for end consumers. Enacted by the Parliament of Australia, this legislation aims to balance the need for revenue generation through customs duties with the broader economic goal of fostering a competitive and efficient marketplace.
Scope and Application
The Tariff Concession Instrument No. 1115300 under the Customs Act 1901 applies specifically to goods for which a Tariff Concession Order (TCO) has been sought and granted. In this case, the instrument pertains to certain pesto processing lines. The application for the concession was lodged by Kupie Pty Ltd on 16 May 2011. The instrument was issued on 8 August 2011 by the Chief Executive Officer of Customs, who determined that the application met the criteria for a TCO, specifically that no substitutable goods were produced in Australia at the time of the application. This means that the TCO applies to those specific goods, resulting in a reduction of customs duty from the general rate of 5% to a duty-free rate for the specified pesto processing lines. The instrument's application is federal and impacts all entities importing these goods into Australia, providing them with tariff concessions on those items. The instrument does not impose any liabilities on any person and does not affect the rights of any person as at the date of registration, unless they are the Commonwealth.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1115300 under the Customs Act 1901 (section 269P(3)) require the Chief Executive Officer of Customs (CEO) to make a written order declaring that certain pesto processing lines are subject to a tariff concession order (TCO) once the application meets the core criteria. This means that these specific goods will now have a rate of duty of free, instead of the general rate of 5% (section 269F). The CEO must be satisfied that no substitutable goods are produced in Australia and that the application does not pertain to goods specified in section 269SJ (section 269C). If these criteria are met, the CEO must issue the TCO, which is effective from the date the application was lodged (subsection 269S(1)).
The obligations imposed by this Act on the parties involved are primarily on the CEO, who must ensure that any TCO application is assessed against the core criteria. The CEO must also publish a notice in the Gazette inviting submissions from any person who might have objections to the TCO being issued (subsection 269K(1)). In this case, no submissions were received. Additionally, importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the TCO was taken to have come into force (paragraph 126(1)(r) of the Regulations).
Breach of the obligations or requirements set out in the Customs Act 1901 can lead to various civil or criminal consequences. For instance, if a person knowingly or negligently provides false or misleading information in an application for a TCO, they may be subject to penalties. The Act does not specify maximum penalties for such breaches, but generally, penalties for providing false information in applications can include fines and imprisonment, depending on the severity of the offence. Furthermore, any failure to comply with the conditions of the TCO may also result in the imposition of fines or other civil penalties as outlined in the relevant sections of the Act.
In summary, the Tariff Concession Instrument No. 1115300 under the Customs Act 1901 sets out a procedure for the CEO to grant tariff concessions on certain goods, provided that the application meets the core criteria and no substitutable goods are produced in Australia. The CEO must publish a notice in the Gazette to allow for objections, and if none are received, the TCO is issued. Importers of the goods can benefit from the reduced duty rates and may apply for a refund of any overpaid duties. Failure to comply with the requirements of the Act can result in civil or criminal penalties, although specific penalties are not detailed in the explanatory statement.