EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0613389
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.
3M Australia Pty Ltd applied for a TCO in respect of certain sponges on 14 August 2006.
Instrument
TCO No 0613389 was made on 3 November 2006. It declares that those certain sponges 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 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. 0613389 is taken to have come into force on 14 August 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, provides a framework for the regulation of customs duties, including the ability to offer tariff concessions on certain goods through Tariff Concession Orders (TCOs). This mechanism was introduced to address the gap in tariff rates for specific goods that are not produced domestically and to encourage the import of these goods, thereby benefiting consumers and potentially stimulating market competition. The Tariff Concession Instrument No. 0613389, made under the authority of the Act, was introduced to provide a zero-rate customs duty on certain sponges, recognising that these goods were not produced in Australia and thus meeting the core criteria set out in the Act. The instrument was intended to enhance the economic efficiency of the market without imposing any liabilities or disadvantaging existing stakeholders, while offering potential benefits to importers who can claim duty refunds.
Scope and Application
The Customs Act 1901, specifically Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to any person who can apply for a TCO under section 269F, provided the goods in question do not fall under the prohibitions outlined in section 269SJ. The scope of the Act extends to any goods that do not have substitutable products manufactured in Australia, as per section 269C, and are produced in the ordinary course of business as defined by section 269E. The application of this Act is national, applying across all jurisdictions in Australia. Notably, the Act does not affect the rights of any person as at the date of registration of the TCO, nor does it impose any liabilities on any person under section 269S(1). The TCO, such as Instrument TCO No. 0613389, which pertains to certain sponges, reduces the duty rate from 5% to 0% upon meeting the core criteria, demonstrating the Act's role in modifying customs duties through subordinate instruments.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0613389 are sections 269C, 269P, and 269S. Section 269C (3) stipulates that a Tariff Concession Order (TCO) application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must make a written order (section 269P(3)). The TCO declares that the goods specified in the application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, with a specified rate of duty (section 269S). In this case, the CEO determined that certain sponges are subject to item 50 of Schedule 4, with a reduced duty rate of 0% instead of the general rate of 5%.
The Act imposes certain obligations and requirements on the parties involved. Firstly, the CEO of Customs must ensure that the application for a TCO is valid and 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 also publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made. Additionally, the CEO must decide whether the application meets the core criteria specified in section 269C of the Act. If the CEO is satisfied that the application meets the criteria, they must make a written order declaring the goods to which the TCO applies.
In terms of offences, penalties, or civil/criminal consequences for breach, the Act does not specify any particular sanctions for non-compliance with the provisions of Tariff Concession Instrument No. 0613389. However, it is important to note that any person who believes they have been adversely affected by the making of a TCO may have recourse to challenge the decision in the appropriate court. Furthermore, any person who knowingly or wilfully contravenes the provisions of the Customs Act 1901 or the Regulations may be subject to penalties, including fines and imprisonment. In the case of Tariff Concession Instrument No. 0613389, the maximum penalties for breach are not specified in the Explanatory Statement.