EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607164
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.
Dale Group International applied for a TCO in respect of certain cot mattress protectors on 18 April 2006.
Instrument
TCO No 0607164 was made on 7 July 2006. It declares that those certain cot mattress protectors 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 17.5%. The rate of duty for the goods subject to the TCO is 0%.
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. 0607164 is taken to have come into force on 18 April 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. 0607164 was enacted in 2006 under the Customs Act 1901, addressing a specific problem by providing tariff concessions for certain goods, in this case, cot mattress protectors, to reduce the customs duty applied to them. The Act, enacted by the Australian Parliament, allows for the application of lower rates of customs duty to goods specified in a Tariff Concession Order (TCO) made by the Chief Executive Officer of Customs. This particular TCO was introduced following an application by Dale Group International and was aimed at ensuring that the specified goods would benefit from a zero percent duty rate, as opposed to the general rate of 17.5%, by confirming that no substitutable goods were produced in Australia. The objective of this TCO, as stated in the explanatory statement, was to ensure that no person other than the Commonwealth would be disadvantaged or incur liabilities as a result of this tariff concession.
Scope and Application
The Tariff Concession Instrument No. 0607164, made under the Customs Act 1901, applies to the process of tariff concession orders (TCOs) for specific goods, in this case, certain cot mattress protectors. The Act allows the Chief Executive Officer of Customs to grant tariff concessions if certain criteria are met, notably if no substitutable goods are produced in Australia. The application of this legislation extends to any entity or individual involved in the importation of these goods, seeking a reduction in customs duty from the general rate of 17.5% to a concessional rate of 0%. The geographic reach of this Act is national, as it pertains to federal customs legislation, and it applies to all such goods entering Australia. The Act does not specify any exclusions or exemptions, but it does stipulate that the concession does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on persons other than the Commonwealth. The application of the Act may be further extended or restricted through subordinate instruments, although in this case, no such extensions or restrictions are mentioned.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 0607164 under the Customs Act 1901 (section 269C) require that a Tariff Concession Order (TCO) application must meet the core criteria, including that no substitutable goods were produced in Australia on the day the application was lodged. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, they must make a TCO (section 269P(3)). This TCO declares that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which in this case, is item 50, resulting in a zero rate of customs duty on certain cot mattress protectors, down from the general rate of 17.5%.
The Act imposes several obligations on parties applying for a TCO. Firstly, the applicant must ensure that their application is not in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. Secondly, the applicant must provide sufficient evidence to demonstrate that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is also required to publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO (subsection 269K(1)).
Failure to comply with the requirements of the Act can result in civil or criminal consequences. The Act does not explicitly state penalties for breaches, but general provisions under the Customs Act 1901 and related legislation could apply, including fines and imprisonment for serious breaches. For instance, knowingly making a false statement in an application could lead to penalties under section 238 of the Act. The TCO itself does not impose any liabilities on any person and does not affect the rights of a person as at the date of registration.
Under the Customs Act, importers of goods subject to a TCO can apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). This ensures that the rights of importers are beneficially affected by the concession. The Act also specifies that 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.