EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1138670
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.
Manildra Group applied for a TCO in respect of certain pallet packing machines on 18 November 2011.
Instrument
TCO No 1138670 was made on 10 February 2012. It declares that those certain pallet packing 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. 1138670 is taken to have come into force on 18 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, established a framework for the regulation of customs duties, including the ability for the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCOs) for specific goods. These concessions can reduce or eliminate customs duties on certain goods under particular circumstances, facilitating trade and potentially lowering costs for businesses importing such goods. Tariff Concession Instrument No. 1138670, issued under the Customs Act 1901, provides a tariff concession for certain pallet packing machines, effectively setting their customs duty rate to free. This was enacted in response to an application by Manildra Group, who sought the concession after demonstrating that no substitutable goods were produced in Australia at the time of application. The policy objective of the concession aligns with broader goals to support Australian industries by making imported goods more competitively priced, thus potentially encouraging trade and economic growth without disadvantaging existing rights or imposing new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods for which a lower rate of customs duty is specified, facilitating import of certain goods under more favourable tariff conditions. An individual or entity may apply for a TCO if the goods in question are not specified in section 269SJ of the Act, which excludes particular goods from tariff concession eligibility. For an application to be considered, the CEO must be satisfied that the goods are not substitutable by any produced in Australia, as defined in sections 269D and 269E, and that no such goods are produced in the ordinary course of business on the day the application was lodged. If these conditions are met, the CEO is required to issue a TCO, specifying the applicable tariff item. The scope of the Act is national, affecting importers of the specified goods by potentially allowing them to claim refunds on duties paid before the TCO's effective date, while not imposing any liabilities on other persons. The Act's application is further extended through subordinate instruments, which provide additional detail and clarification on the implementation of TCOs.
Key Provisions
The main operative sections of this Tariff Concession Instrument No. 1138670, as referenced in the Customs Act 1901, revolve around the process and conditions for granting Tariff Concession Orders (TCOs) (s 269C, s 269F, s 269SJ). Under section 269F, a person can apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning specific goods. If the CEO determines that the application is valid and meets the core criteria outlined in section 269C, which includes ensuring that no substitutable goods are produced in Australia, the CEO is required to issue a written TCO. This order declares that the specified goods will be subject to a reduced rate of customs duty, as outlined in Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on both the applicant and the CEO. For the applicant, the primary obligation is to ensure that the TCO application is made in good faith and includes all necessary information to demonstrate that the goods in question meet the criteria for concession (s 269F). The CEO, on the other hand, must rigorously assess the application to verify that it complies with the statutory requirements, including the core criteria specified in section 269C, and that no substitutable goods are produced in Australia (s 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be granted (s 269K(1)).
Any failure to comply with the provisions of the Customs Act 1901 or the conditions set out in the TCO can result in civil or criminal penalties. While the explanatory statement does not specify the exact penalties, breaches of customs laws generally can lead to fines and, in more severe cases, imprisonment. For instance, knowingly making a false statement in an application for a TCO could be considered an offence under section 264 of the Customs Act 1901, which could result in a maximum penalty of two years imprisonment, reflecting the seriousness of such an infraction.
The TCO itself, once issued, has the effect of reducing the customs duty on the specified goods to zero, from the date the application was lodged, as per subsection 269S(1). This means that importers of these goods can benefit from the concession by applying for a refund of any duties paid on imports of these goods since the effective date of the TCO (Regulation 126(1)(r)). Importantly, the TCO does not impose any new liabilities on any person and does not affect existing rights as at the date of registration, thereby providing a clear and beneficial outcome for those who import the specified goods.