EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1129972
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.
DFC Packaging Machinery Pty Ltd applied for a TCO in respect of certain food machines on 02 September 2011.
Instrument
TCO No 1129972 was made on 28 November 2011. It declares that those certain food 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. 1129972 is taken to have come into force on 02 September 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, establishes a framework under which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs. This legislation was introduced to address the need for tariff concessions on certain goods, ensuring that Australian businesses can access necessary machinery and equipment at reduced customs duty rates when no locally produced alternatives exist. Specifically, Part XVA of the Customs Act 1901 empowers the CEO to issue TCOs, which reduce the duty on specified goods if they are not produced domestically and if no suitable substitute is available. This mechanism aims to support Australian industries by lowering the cost of importing essential machinery, thereby enhancing competitiveness and operational efficiency. The policy objective is to facilitate the import of goods that are critical for production but not manufactured within Australia, ensuring that businesses can function effectively without undue financial burdens imposed by customs duties.
Scope and Application
The Customs Act 1901 applies to the application for Tariff Concession Orders (TCOs) concerning the importation of specific goods into Australia. The Act allows the Chief Executive Officer of Customs to consider applications for TCOs from individuals or entities seeking lower rates of customs duty on goods not produced in Australia in the ordinary course of business. Once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting any interested parties to object to the TCO, though no objections were received in this case. The Act ensures that the application of a TCO does not retroactively disadvantage any person, meaning that it does not affect rights or impose liabilities for actions taken before the TCO's effective date. For the TCO in question, certain food machines are granted a free rate of duty, differing from the general rate of 5%, and importers can apply for duty refunds for these goods imported since the TCO's effective date.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269F, and 269P 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) in respect of goods. Section 269C specifies the core criteria that an application must meet to be considered by the CEO, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business at the time the application was lodged. If the CEO is satisfied that the application meets these criteria, they are required by section 269P(3) to issue a written TCO, declaring the goods to which a specified item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting the tariff concession.
The Customs Act 1901 imposes certain obligations on the CEO and the applicants for a TCO. The CEO must ensure that any TCO application received is not in respect of goods specified in section 269SJ, which lists goods ineligible for a TCO. Upon accepting a TCO application as valid, the CEO is required by subsection 269K(1) to publish a notice in the Gazette, inviting any person who believes there are reasons why the TCO should not be made to submit their views. In this instance, the CEO did not receive any submissions. Additionally, the CEO must verify that the application meets the core criteria set out in section 269C, which includes confirming that no substitutable goods were produced in Australia at the time the application was lodged.
The legislation provides for civil and criminal consequences in the event of non-compliance with its provisions. Specifically, subsection 269S(1) of the Customs Act 1901 states that a TCO is to be taken as coming into force on the day the application for the TCO was lodged. While the explanatory statement does not specify any penalties for breaches of the TCO provisions, general provisions within the Customs Act 1901 may apply, including fines and imprisonment for serious breaches. The maximum penalties for contravening the Customs Act 1901 can vary, but they can include substantial fines and imprisonment, depending on the severity of the offence. The TCO itself does not impose any liabilities on any person, and the rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations.