EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1137764
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.
Laurent E Pty Ltd applied for a TCO in respect of certain dough production line on 14 November 2011.
Instrument
TCO No 1137764 was made on 10 February 2012. It declares that those certain dough production 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. 1137764 is taken to have come into force on 14 November 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, includes provisions that allow for the introduction of Tariff Concession Orders (TCOs) under its Part XVA. This scheme was introduced to address the issue of providing tariff relief on specific goods that are not produced domestically or are not readily substitutable by locally manufactured products. The objective of this legislative framework is to encourage the importation of certain goods by reducing or eliminating customs duty on them, thus promoting economic efficiency and potentially lowering consumer prices. The Tariff Concession Instrument No. 1137764, issued on 10 February 2012, is an example of this process, where the Chief Executive Officer of Customs granted a concession to Laurent E Pty Ltd for a dough production line, reducing the duty rate from 5% to free. This measure was made effective from the date the application was lodged, 14 November 2011, and was not subject to any submissions opposing the concession, indicating a clear path for tariff relief where applicable.
Scope and Application
The Tariff Concession Instrument No. 1137764 pertains to the Customs Act 1901 and establishes a tariff concession order (TCO) for certain dough production line equipment, effective from the date the application was lodged, 14 November 2011. This instrument applies to entities that import these specific goods, allowing them to benefit from a reduced customs duty rate from the general 5% to free. The scope of the Act involves individuals or entities applying for and receiving a TCO for goods that are not substitutable by any goods produced in Australia, as defined under the Customs Act 1901 and the Customs Tariff Act 1995. The geographic reach of this legislation is national, as it falls under the Commonwealth jurisdiction. The TCO does not disadvantage any person or impose liabilities for actions taken before its registration, thereby safeguarding the interests of importers who can claim refunds for duties paid on imports since the effective date. The Act’s application can be extended or restricted through subordinate instruments, although in this instance, no such modifications are noted.
Key Provisions
The main operative sections of the Customs Act 1901, as they pertain to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269P, and 269SJ (sections referenced in parentheses). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO for goods. If the application is not in respect of goods specified in section 269SJ, the CEO must determine whether it meets the core criteria outlined in section 269C. If the application meets these criteria, the CEO must issue a written order as a TCO, specifying the lower customs duty rate applicable to the goods (section 269P(3)).
The Customs Act imposes several obligations on the parties involved in the TCO process. Firstly, the CEO must ensure that any TCO application is not in respect of goods specified in section 269SJ. The CEO must then verify if the application meets the core criteria as defined in section 269C, which involves checking if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Upon satisfying these criteria, the CEO must make a written TCO, specifying the lower customs duty rate for the goods. Additionally, the CEO is required to publish a notice in the Gazette inviting any person who considers the TCO should not be made to submit their reasons (subsection 269K(1)).
Under this Act, there are no specific offences or penalties for breach related to the making of a TCO. However, non-compliance with the terms of the TCO itself or failure to correctly apply for a TCO could potentially lead to civil or criminal consequences under other relevant sections of the Customs Act or associated regulations. For example, misrepresentation in an application could lead to penalties under section 242A of the Customs Act, which imposes penalties for providing false or misleading information to the CEO.
The Tariff Concession Order No. 1137764, made on 10 February 2012, is an example of how these sections are applied. Laurent E Pty Ltd applied for a TCO for certain dough production lines on 14 November 2011. The CEO determined that the application met the core criteria, as no substitutable goods were produced in Australia. Consequently, the CEO issued TCO No. 1137764, which specifies that these goods are subject to a zero rate of customs duty, as opposed to the general 5% duty rate. The TCO came into effect on 14 November 2011, the day the application was lodged. Importantly, the TCO does not disadvantage any person or impose liabilities in respect of actions taken before the date of registration. Importers of the affected goods can apply for a refund of duty paid on imports since the TCO's effective date.