EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1130077
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.
The Wrigley Company applied for a TCO in respect of certain grinding mills on 02 September 2011.
Instrument
TCO No 1130077 was made on 28 November 2011. It declares that those certain grinding mills 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. 1130077 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 Australian Parliament, establishes a framework for the imposition of customs duty on imported goods. The Act, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specified goods, provided certain criteria are met. The primary problem this legislation addresses is the need to encourage the import of goods that are not domestically produced, thereby supporting industries that may lack local manufacturing capacity. The policy objective is to foster economic growth and competitiveness by reducing the cost of imported goods that are not produced in Australia, thereby stimulating demand and potentially encouraging domestic production in the future. The Wrigley Company's application for a TCO in respect of certain grinding mills exemplifies this process, where the CEO determined that no substitutable goods were produced in Australia, thereby approving the concession and setting the duty rate at free.
Scope and Application
The Tariff Concession Instrument No. 1130077, which pertains to the Customs Act 1901, is specifically targeted at the concession of customs duty rates for certain goods, as outlined in the Customs Tariff Act 1995. This legislation applies to any entity or individual seeking tariff concessions for goods that are not produced in Australia and for which no substitutable goods are available domestically. The Act operates under the purview of the Chief Executive Officer of Customs, who has the authority to grant these concessions if the application adheres to the core criteria specified in the Act. The instrument extends its reach to all relevant industries and transactions involving the importation of the specified goods, and it is effective throughout Australia, encompassing both Commonwealth and state jurisdictions. The instrument does not apply to goods that are expressly prohibited from receiving tariff concessions as per section 269SJ of the Customs Act. The application of this Act may be further refined through subordinate instruments, which can provide additional specifications or limitations on its application.
Key Provisions
The main operative sections of the Customs Act 1901 in relation to Tariff Concession Orders (TCOs) include section 269F, which allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C sets out the core criteria that must be met for the application to be considered, primarily requiring that no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, section 269P(3) mandates that a written order, or TCO, must be made declaring that the specified goods are to which a particular tariff item applies. In the case of TCO No. 1130077, the CEO was satisfied that the application met the criteria, and the TCO was made on 28 November 2011, declaring that the certain grinding mills in question were to which item 50 of Schedule 4 to the Tariff applies.
The obligations and requirements imposed by the Act on the parties it governs are primarily centred around the process of applying for and obtaining a TCO. The applicant must ensure that their application is valid and meets the core criteria as outlined in section 269C. The CEO, on receiving a valid application, is required to make a decision based on whether the core criteria are satisfied. Additionally, as per section 269K(1), the CEO must publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission. The CEO must also ensure that no person, other than the Commonwealth, is disadvantaged or imposed with liabilities in respect of anything done or omitted to be done before the date of registration of the TCO.
The Act does not explicitly state offences or penalties for breach of its provisions regarding TCOs. However, the consequences for non-compliance could include the denial of a TCO, which might result in the applicant facing the general rate of duty on the goods instead of the concessional rate. The Act ensures that the rights of importers will be beneficially affected, and they can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations. The Act also explicitly states that it does not impose any liabilities on any person other than the Commonwealth.