EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0515294
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.
Interclean Australia applied for a TCO in respect of certain carpet scrubbing pads or bonnets on 23 December 2005.
Instrument
TCO No 0515294 was made on 17 March 2006. It declares that those certain carpet scrubbing pads or bonnets 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. 0515294 is taken to have come into force on 23 December 2005.
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 Tariff Concession Instrument No. 0515294, enacted in 2006, is an instrument under the Customs Act 1901 designed to provide tariff concessions on specific goods, thereby addressing the problem of potentially higher customs duty rates on certain imported products. The Act was enacted by the Commonwealth Parliament to facilitate tariff concessions that encourage trade by reducing the cost of importing specific goods. This instrument was made in response to an application by Interclean Australia for tariff concessions on certain carpet scrubbing pads or bonnets. The policy objective is to provide relief to importers by lowering the customs duty rate from the general rate of 5% to free, provided no substitutable goods are produced in Australia, thereby fostering a competitive market environment.
Scope and Application
The Tariff Concession Instrument No. 0515294 under the Customs Act 1901 applies specifically to goods that are the subject of a Tariff Concession Order (TCO), which in this case are certain carpet scrubbing pads or bonnets. The Act allows for the application of a lower rate of customs duty on these goods, provided that they meet the core criteria outlined in the legislation, such as the absence of substitutable goods produced in Australia. The Chief Executive Officer of Customs (CEO) has the authority to make a TCO if they are satisfied that the application complies with the requirements set out in section 269F of the Act. The scope of the TCO is national, impacting the entire Commonwealth of Australia, and it extends to all entities and individuals involved in the import of these specified goods. The TCO provides a tariff concession, reducing the duty rate from the general 5% to free, benefiting the importers of these goods. Importantly, the TCO does not affect the rights of any person adversely and does not impose any liabilities on individuals or entities other than the Commonwealth. Any person considering the imposition of a TCO has the opportunity to submit objections, although in this instance, no such submissions were received.
Key Provisions
The Tariff Concession Order (TCO) No. 0515294, made under section 269P of the Customs Act 1901, establishes a tariff concession for certain carpet scrubbing pads or bonnets, as specified by the Chief Executive Officer of Customs (CEO) following an application by Interclean Australia. Under section 269P(3), the CEO issued this TCO because it was determined that no substitutable goods were being produced in Australia on the date the application was lodged. As a result, the TCO applies item 50 of Schedule 4 to the Customs Tariff Act 1995, which sets the rate of duty on these goods at free, down from the general rate of 5%.
The obligations imposed by this TCO primarily affect the CEO, who must review TCO applications against the core criteria outlined in sections 269C and 269SJ of the Customs Act 1901. The CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as stipulated in section 269K(1) of the Act. The TCO became effective on the date the application was lodged, in accordance with section 269S(1) of the Customs Act 1901. It is important to note that the TCO does not disadvantage any person, other than the Commonwealth, who had rights as of the registration date, nor does it impose any new liabilities.
Failure to comply with the provisions of the Customs Act 1901, including the requirements for issuing TCOs, could result in civil or criminal penalties. Although the specific penalties are not detailed in the explanatory statement, the Act generally provides for fines and imprisonment for breaches. For example, under section 269ZC of the Customs Act 1901, any person who contravenes the Act can be subject to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for serious offences. The CEO's failure to properly apply the core criteria when considering a TCO application could similarly result in penalties for both the officer and the applicant, depending on the nature and severity of the breach.