EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1132157
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.
Kraft foods Australia applied for a TCO in respect of certain chocolate mixing machines on 21 September 2011.
Instrument
TCO No 1132157 was made on 21 December 2011. It declares that those certain chocolate mixing 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. 1132157 is taken to have come into force on 21 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 was enacted by the Parliament of Australia to facilitate the regulation and management of customs duties and related matters. A specific problem that this Act addresses is the ability to provide tariff concessions on certain goods, ensuring that Australian industries can remain competitive without undue financial burden. Part XVA of the Act provides the framework under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. The policy objective of this legislative framework is to allow for the reduction or elimination of customs duties on specific goods, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. This process allows for the fair and strategic economic management of imported goods, ensuring that Australian industries can thrive without being unnecessarily taxed at the border. The explanatory statement for Tariff Concession Instrument No. 1132157, made in 2011, illustrates this process in action, as it provides tariff concessions on certain chocolate mixing machines, reducing their duty rate from 5% to free, thereby aiding the relevant industry.
Scope and Application
The Tariff Concession Instrument No. 1132157, under the Customs Act 1901, applies to goods specified in the Instrument, namely certain chocolate mixing machines. This instrument was made by the Chief Executive Officer of Customs (CEO) following an application by Kraft Foods Australia. The application was made on 21 September 2011 and the Instrument was issued on 21 December 2011. The CEO was satisfied that no substitutable goods were produced in Australia at the time of the application, thereby meeting the core criteria set out in the Act. This Instrument grants a concession by applying a free rate of duty to the specified goods, which contrasts with the general rate of duty of 5% as set out in the Customs Tariff Act 1995. The geographic and jurisdictional reach of this Instrument is limited to the Commonwealth of Australia. There are no stated exclusions or exemptions in this particular Instrument, though the Act provides certain goods that cannot be subject to a TCO, which were not applicable in this case. The commencement date of the Instrument is the same as the date the application was lodged, 21 September 2011. The CEO was required to publish a notice in the Gazette inviting submissions, but none were received. The Instrument does not affect the rights of any person, nor does it impose any liabilities on any person.
Key Provisions
The primary sections relevant to the Tariff Concession Order (TCO) 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 specifies the core criteria that a TCO application must meet, namely that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that an application meets the core criteria, they must make a written order declaring that the goods the subject of the application are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
The obligations imposed by the Customs Act 1901 on the parties involved in the TCO process are significant. The CEO is required to decide whether a TCO application meets the core criteria as per section 269C and to publish a notice in the Gazette inviting submissions if the application is accepted as valid, under section 269K(1). Additionally, the applicant must ensure that their application is complete and meets all the stipulated criteria before submission. The CEO must act promptly and judiciously in evaluating applications to ensure compliance with the Act.
Failure to comply with the requirements of the Act can lead to various consequences. While the Explanatory Statement does not explicitly detail the penalties for non-compliance, breaches of customs regulations can generally lead to civil or criminal penalties. For instance, knowingly making a false statement or providing false information in an application can result in substantial fines or imprisonment, as outlined in the Crimes Act 1914. The specific penalties would depend on the nature and severity of the breach, but the Act provides a framework for imposing appropriate sanctions to ensure compliance.
The Tariff Concession Order No. 1132157, made on 21 December 2011, specifically addresses the application by Kraft Foods Australia for tariff concessions on certain chocolate mixing machines. By declaring that these machines are subject to a free rate of duty, the order directly benefits importers of these goods. Importantly, the TCO does not affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person. Importers can apply for a refund of duty on goods imported since the TCO is taken to have come into force on 21 September 2011, under paragraph 126(1)(r) of the Regulations. This provision ensures that the rights of importers are protected and that they can benefit from the tariff concessions provided by the order.