EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618520
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 0618520 was made on 2 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. 0618520 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 was enacted by the Australian Parliament and establishes a framework for the regulation of customs and border control. One of its provisions allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, to reduce the rate of customs duty on certain goods. This mechanism was introduced to address the problem of ensuring that Australian industries can access necessary goods at a lower cost, particularly when those goods are not produced domestically. The explanatory statement outlines the process by which an application for a TCO is evaluated, focusing on whether substitutable goods are produced in Australia. In this instance, TCO No. 0618520 was made in response to an application by Multigate Medical Products Pty Ltd for certain sterilisation wraps, which resulted in a reduction of the duty rate from 5% to 0%. The policy objective here is to facilitate the import of goods that are not domestically produced, thereby benefiting industries that rely on these imports.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to any person or entity seeking to import goods that qualify for a lower rate of customs duty under a TCO. The scope of the Act includes goods that are not specified as ineligible under section 269SJ, which details those goods that cannot be subject to a TCO. A TCO application is considered valid if, on the date it was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The Act's jurisdiction extends across the Commonwealth of Australia, ensuring uniformity in the application and enforcement of tariff concessions. Notably, the Act does not affect the rights of any person other than the Commonwealth in respect of actions taken before the TCO's effective date. The application of the Act may be further defined or restricted through subordinate instruments, which can specify additional criteria or conditions for the granting of TCOs.
Key Provisions
The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) under section 269F (1), enabling a lower rate of customs duty for certain goods. If an application for a TCO is made and the Chief Executive Officer of Customs (CEO) is satisfied that the goods do not fall under the restricted category listed in section 269SJ, the CEO must determine whether the application meets the core criteria specified in section 269C. This involves verifying that, on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of key terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. Once the CEO confirms that the core criteria are met, they must issue a written order under section 269P(3), declaring that the specified goods are subject to a prescribed tariff item in Schedule 4 to the Customs Tariff Act 1995.
Entities or individuals seeking a TCO must comply with the procedural requirements set out in the Customs Act 1901. This includes ensuring that the application is made in good faith and is supported by evidence that the goods do not have substitutable alternatives produced in Australia. The CEO has the discretion to request further information or clarification if necessary. Additionally, the CEO is obligated to publish a notice in the Gazette under subsection 269K(1) inviting any interested parties to submit objections or comments on the proposed TCO. This ensures transparency and provides an opportunity for public consultation. If no objections are received, the CEO proceeds to make the TCO.
Failure to comply with the requirements of the Customs Act 1901 or the fraudulent submission of information can lead to legal consequences. Under section 274 of the Customs Act 1901, penalties may include fines of up to 10,000 penalty units or imprisonment for up to five years, or both, for individuals, and up to 50,000 penalty units for bodies corporate. The Act also provides for civil penalties and the possibility of cancelling or revoking a TCO if it is found that the application was made in bad faith or with incorrect information. These penalties are intended to deter non-compliance and maintain the integrity of the tariff concession scheme.