EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604626
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.
British American Tobacco Ltd applied for a TCO in respect of certain gusseted tobacco pouches on 28 February 2006.
Instrument
TCO No 0604626 was made on 12 May 2006. It declares that those certain gusseted tobacco pouches 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. 0604626 is taken to have come into force on 28 February 2006.
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. 0604626, enacted under the Customs Act 1901, aims to provide relief to certain goods by reducing the rate of customs duty through a Tariff Concession Order (TCO). The Act allows the Chief Executive Officer of Customs to establish a lower customs duty for specified goods if certain criteria are met. This was introduced to address the problem of imposing unjustifiably high tariffs on goods where no suitable Australian-made alternatives exist. The Tariff Concession Instrument was made on 12 May 2006, following an application by British American Tobacco Ltd for tariff concessions on certain gusseted tobacco pouches. The instrument was introduced to provide tariff relief on these specific goods, with the general rate of duty being reduced from 5% to free, effective from 28 February 2006. The policy objective is to ensure that Australian consumers and businesses are not unfairly burdened by high tariffs on goods that can be sourced without local production.
Scope and Application
The Customs Act 1901 provides a mechanism through which the Chief Executive Officer of Customs can grant tariff concessions on certain goods, as outlined in Part XVA of the Act. The scope of this legislation applies to individuals or entities who apply for a Tariff Concession Order (TCO) on specific goods, ensuring that the goods do not have substitutable products produced in Australia. This legislation has a national jurisdictional reach, as it applies across the Commonwealth of Australia. The application process involves the CEO assessing whether the goods in question meet the core criteria set out in the Act, specifically that no substitutable goods are produced domestically. If the CEO determines that the application meets these criteria, a TCO is issued, which then applies a lower rate of customs duty on the specified goods. It is noteworthy that the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth, and it does not affect any rights as at the date of registration. The legislation allows for the scope to be extended or restricted through subordinate instruments, ensuring flexibility in its application.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0604626, which is a component of the Customs Act 1901, involve the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (section 269F). If an application for a TCO is made in relation to goods not specified in section 269SJ, the CEO must determine whether the application meets the core criteria under sections 269C and 269P(3). Specifically, section 269C mandates that the CEO must make a TCO if, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This decision is informed by the definitions provided in sections 269D, 269E, and 269F regarding the production of goods in Australia, ordinary course of business, and substitutable goods respectively.
In terms of obligations, the Act imposes several key requirements on the parties involved. The CEO of Customs has a duty to make a TCO if the core criteria are met (section 269C). This process involves ensuring that the goods in question are not substitutable by Australian-made goods and that the application does not pertain to goods specified in section 269SJ. Additionally, the CEO is mandated to publish a notice in the Gazette once an application is accepted as valid, inviting any interested parties to submit objections (subsection 269K(1)). This transparency measure ensures that all relevant stakeholders have the opportunity to voice any concerns or objections regarding the proposed tariff concession.
Furthermore, the Act outlines various consequences and penalties for non-compliance with its provisions. While the specific penalties for breaching the Customs Act 1901 are not detailed in this explanatory statement, it is worth noting that general breaches of the Act may lead to civil or criminal penalties, including fines and imprisonment. These penalties can be severe, reflecting the importance of adhering to the legislative framework governing customs duties and tariff concessions. The Act also ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any liabilities on any person, thereby protecting stakeholders from any disadvantage or additional burdens.