EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0608338
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.
Sunbeam Corporation Ltd applied for a TCO in respect of certain heated quilts on 12 May 2006.
Instrument
TCO No 0608338 was made on 28 July 2006. It declares that those certain heated quilts 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 7.5%. 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. 0608338 is taken to have come into force on 12 May 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the regulation of customs duties and related matters. Specifically, Part XVA of the Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply reduced customs duty rates to specified goods. The problem this legislation addresses is the potential for unfair customs duties on goods for which suitable substitutes are not produced within Australia. This can protect domestic industries and encourage the production of goods within Australia. Instrument No. 0608338, made under the Customs Act 1901, grants a tariff concession to Sunbeam Corporation Ltd for certain heated quilts, reducing the customs duty on these goods from 7.5% to 0%. This concession was granted after it was determined that no substitutable goods were produced in Australia at the time of the application. The process for making this decision involved a public invitation for submissions, none of which were received. The tariff concession came into effect on the date the application was lodged, 12 May 2006. Importantly, the concession does not affect the rights of any person other than the Commonwealth and does not impose any new liabilities on individuals.
Scope and Application
The Customs Act 1901, through its Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) are made by the Chief Executive Officer of Customs (the CEO). These orders apply to specific goods, offering lower rates of customs duty compared to the general tariff. Applications for a TCO can be submitted by any person, provided the goods in question are not those specified in section 269SJ of the Act as ineligible for concessions. The CEO evaluates the application against the core criteria set out in sections 269C, 269B, and 269D of the Act, focusing on whether substitutable goods are produced in Australia in the ordinary course of business. If no such goods exist, the CEO is obligated to issue a TCO, which is effective from the date the application was lodged. This legislative framework facilitates the reduction of customs duty rates for certain goods, benefiting importers who may apply for refunds of duties paid on those goods since the effective date of the TCO. The legislation does not disadvantage any person or impose liabilities on anyone in respect of actions taken prior to the TCO's effective date.
Key Provisions
The main operative sections of this Tariff Concession Instrument, which is based on the Customs Act 1901, include section 269F, which allows for the application of Tariff Concession Orders (TCOs) for certain goods. Section 269C sets out the core criteria that must be met for a TCO to be granted, such as the absence of substitutable goods produced in Australia on the day the application was lodged. Section 269P(3) requires the Chief Executive Officer of Customs (CEO) to make a written TCO if the application meets the core criteria, which in this case was done for heated quilts (section 269P(3)). The TCO specifies that these heated quilts are subject to a 0% customs duty rate instead of the general rate of 7.5% (section 269P(3)).
The obligations and requirements imposed by the Act on the parties it governs include the necessity for an applicant, such as Sunbeam Corporation Ltd, to ensure their application for a TCO meets the core criteria outlined in section 269C. The CEO is required to publish a notice in the Gazette, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission (subsection 269K(1)). If the CEO is satisfied that the application meets the core criteria, they must make a written TCO (subsection 269P(3)). Additionally, the TCO must be registered and it comes into force on the day the application for the TCO was lodged (subsection 269S(1)).
Any breaches of the provisions outlined in the Customs Act 1901 or the Tariff Concession Instrument may result in civil or criminal consequences. While the explanatory statement does not specify penalties, under the Customs Act, breaches can lead to fines and imprisonment. For example, under section 206 of the Act, a person can be fined up to 10,000 penalty units or imprisoned for up to five years, or both, for making a false or misleading statement in relation to customs matters. Similarly, section 217 imposes fines of up to 10,000 penalty units or imprisonment for up to five years, or both, for offences such as smuggling or attempting to evade duty. The exact penalties will depend on the nature and severity of the breach.