EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618519
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.
Multigate Medical Products Pty Ltd applied for a TCO in respect of certain sterilisation wraps on 14 November 2006.
Instrument
TCO No 0618519 was made on 5 February 2007. It declares that those certain sterilisation wraps 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. 0618519 is taken to have come into force on 14 November 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 Parliament of Australia, provides a framework for the regulation of imports and exports through customs duties. Part XVA of this Act facilitates the implementation of Tariff Concession Orders (TCOs), which allow for the reduction or elimination of customs duties on certain goods, provided they meet specific criteria. The problem this legislation addresses is the need to encourage the importation of goods that are not produced domestically, thereby supporting economic efficiency and consumer choice. The policy objective, as stated in the explanatory statement, is to ensure that no substitutable goods are produced in Australia before granting a TCO. In this particular case, Tariff Concession Instrument No. 0618519, made on 5 February 2007, concerns certain sterilisation wraps, for which the Chief Executive Officer of Customs determined that no suitable Australian-made alternatives existed. Consequently, a TCO was issued, reducing the duty on these goods from 5% to 0%, effective from 14 November 2006, the date the application was lodged.
Scope and Application
The Tariff Concession Instrument No. 0618519 under the Customs Act 1901 applies to goods that are the subject of a Tariff Concession Order (TCO). Specifically, this instrument pertains to certain sterilisation wraps, where the Customs Act authorises the Chief Executive Officer of Customs to grant a TCO to reduce the rate of customs duty. The application of this instrument extends to any entity or individual involved in the importation of the specified goods, provided that the TCO criteria are met. The geographic reach of this legislation is national, as it pertains to the importation of goods into Australia and is governed by the Commonwealth. The Act does not apply to goods listed in section 269SJ of the Customs Act 1901, which includes those goods that cannot be subject to a TCO. The instrument was made under section 269F of the Customs Act 1901 and came into force on 14 November 2006, the date the application was lodged. The Act allows for the extension of its application through subordinate instruments, which can specify additional details or criteria for TCO applications.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) through Part XVA. Under this scheme, a lower rate of customs duty can apply to certain goods specified in a TCO, as outlined in section 269F. The Chief Executive Officer of Customs (CEO) can make a TCO if an application is made by a person and meets the core criteria specified in section 269C. For an application to meet these criteria, the CEO must be satisfied that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined in sections 269D and 269E. If these conditions are met, the CEO must issue a written order specifying the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies, as per section 269P(3).
The obligations imposed on parties by the Customs Act 1901 require that an applicant must ensure their application for a TCO is made in accordance with the provisions of the Act. The CEO has the responsibility to assess whether the application meets the core criteria and must publish a notice in the Gazette, inviting submissions from any interested parties, as per subsection 269K(1). The CEO must also consider whether the goods in question have substitutable goods produced in Australia as per sections 269D and 269E. If the CEO decides to proceed, they must issue a written TCO specifying the applicable tariff concession. Additionally, subsection 269S(1) mandates that a TCO is considered effective from the day the application was lodged.
Under the Customs Act 1901, failure to comply with the provisions for TCOs can lead to civil or criminal consequences. For example, if an applicant provides false information in their TCO application, they may face penalties for misleading or deceptive conduct under the Australian Consumer Law, which can include fines of up to $1.1 million for corporations and $220,000 for individuals. Additionally, if the CEO fails to adhere to the statutory requirements for issuing or assessing TCOs, they may be subject to disciplinary action or legal challenges for improper exercise of their powers. Breaches of the Act can also lead to penalties under the Customs Act itself, which may include fines or imprisonment, depending on the severity of the breach.