EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139037
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 filtration machines on 23 November 2011.
Instrument
TCO No 1139037 was made on 13 February 2012. It declares that those certain filtration 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. 1139037 is taken to have come into force on 23 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 Australian Parliament, provides a framework for the administration of customs and excise duties. One notable feature of the Act is the ability for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that lower the duty payable on certain imported goods. The Explanatory Statement for Tariff Concession Instrument No. 1139037 outlines the process and criteria for such concessions. The instrument was introduced to address the specific case of the Manildra Group's application for a concession on certain filtration machines, ensuring that the goods in question were not substitutable by Australian-produced alternatives. This measure aims to support businesses by reducing the cost of importing critical machinery, thereby promoting industrial efficiency and competitiveness without imposing any new liabilities or affecting existing rights adversely.
Scope and Application
The Customs Act 1901, as amended, provides a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs to offer tariff concessions on specific goods. These orders apply to the goods specified in the order and the person or entity that holds the concession. The geographic and jurisdictional reach of this legislation is national, as it is a Commonwealth Act. The Act applies to any person or entity that meets the core criteria for a TCO, which includes ensuring that the goods in question are not substitutable by goods produced in Australia in the ordinary course of business. The application process requires that the applicant submit an application to the CEO, who then assesses whether the application meets the criteria outlined in the Act. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ. The application of the Act can be extended or clarified through subordinate instruments, but the primary legislation itself sets the core criteria and processes for issuing TCOs.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1139037 under the Customs Act 1901 (section 269F) establish the process for applying for and granting a Tariff Concession Order (TCO). An application can be made by any person seeking a lower rate of customs duty on specified goods (section 269F). The Chief Executive Officer of Customs (CEO) must then decide if the application meets the core criteria, which requires, among other things, that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If these criteria are met, the CEO is required to make a written order (section 269P(3)), declaring the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, thereby granting the tariff concession.
The obligations imposed by the Act on the parties include the requirement for the CEO to assess the validity of an application for a TCO and to publish a notice in the Gazette inviting submissions from any interested parties who may have objections to the granting of the TCO (subsection 269K(1)). The CEO must consider any submissions received before making a final decision on the TCO application. In this case, no submissions were received in response to the notice, facilitating a straightforward approval process. Additionally, the Act ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the TCO and that no new liabilities are imposed on any person (subsection 269S(1)).
For breaches of the provisions outlined in the Customs Act 1901, including failure to comply with the requirements for applying for or granting a TCO, various civil and criminal penalties may apply. While the specific penalties for breach of the Customs Act are not detailed in the explanatory statement, penalties for breaches of customs laws can include fines and imprisonment. For example, under section 240 of the Customs Act 1901, the maximum penalty for knowingly making a false statement in relation to the importation or exportation of goods is a fine of up to 10,000 penalty units or imprisonment for up to five years, or both. These penalties underscore the importance of compliance with the legislative requirements for tariff concessions.