EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619262
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.
Unilever Australasia Pty Ltd applied for a TCO in respect of certain cold stampers on 1 December 2006.
Instrument
TCO No 0619262 was made on 2 March 2007. It declares that those certain cold stampers 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. 0619262 is taken to have come into force on 1 December 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, establishes a framework for managing customs duties, including the ability to apply for tariff concession orders (TCOs) to reduce the duty on certain goods. The problem it addresses is the potential economic disadvantage to Australian businesses when imported goods that are not produced domestically offer competitive advantages in terms of cost and design. The explanatory statement for Tariff Concession Instrument No. 0619262, published on 2 March 2007, details a specific instance where Unilever Australasia Pty Ltd applied for and received a tariff concession for certain cold stampers, reducing the duty on these items from 5% to 0%. This instrument was designed to ensure that such tariff reductions do not disadvantage existing producers or impose new liabilities, while providing relief to importers of these goods by allowing them to claim refunds on duties paid prior to the concession coming into effect.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act applies to any person or entity seeking to import goods into Australia, particularly those who may benefit from a lower rate of customs duty under a TCO. The application process requires an assessment by the CEO to determine if the goods are substitutable and if they are not produced in Australia in the ordinary course of business, which is defined in sections 269D and 269E respectively. The scope of the Act is national, affecting all states and territories within Australia. Exclusions apply to goods specified in section 269SJ of the Act, which are ineligible for a TCO. The legislation also extends its application through subordinate instruments such as the Customs Tariff Act 1995, which specifies the rates of duty applicable to goods under a TCO. In the case of TCO No. 0619262, certain cold stampers are subject to a duty rate of 0% instead of the general rate of 5%. The instrument was published in the Gazette with an invitation for public submissions, though none were received in response. The TCO came into force on the date the application was lodged, 1 December 2006, and benefits importers by allowing them to apply for refunds of duty on goods imported since that date, without imposing new liabilities on any person.
Key Provisions
The primary sections of this legislation, specifically sections 269C, 269B, 269D, 269E, 269F, 269K, 269P, 269S, and 269SJ of the Customs Act 1901, establish the framework for Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning goods. If the CEO determines that the application meets the core criteria (section 269C), and it is not in respect of goods specified in section 269SJ, they must make a written order (section 269P(3)) that reduces the customs duty on those goods, as specified in Schedule 4 of the Customs Tariff Act 1995. For instance, in this case, Unilever Australasia Pty Ltd applied for a TCO for certain cold stampers, which resulted in the customs duty on these goods being reduced from 5% to 0%. The CEO must also publish a notice in the Gazette (section 269K(1)) inviting submissions against the TCO application, although in this instance, no submissions were received.
The Customs Act 1901 imposes several obligations on the CEO when considering a TCO application. Firstly, the CEO must ensure that the application is not for goods listed in section 269SJ, which includes certain firearms and tobacco products that cannot be subject to a TCO. Secondly, the CEO must determine whether the application meets the core criteria by verifying that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). If these conditions are met, the CEO must proceed with making the TCO. Additionally, the CEO must publish a notice in the Gazette to inform the public of the TCO application and invite any objections or submissions, although no objections were received in this case.
In terms of potential breaches and consequences, the Customs Act 1901 does not specify explicit offences or penalties for failing to comply with the requirements of a TCO. However, any party found to be misusing or abusing the tariff concession provisions could potentially face civil or criminal consequences under other sections of the Customs Act or related legislation. For example, knowingly providing false or misleading information in a TCO application could lead to penalties under sections related to fraud or deception. The specific penalties for such offences would depend on the nature and severity of the breach, but could include fines and imprisonment.
The TCO itself, once made, does not impose any liabilities on any person other than the Commonwealth. It does not affect the rights of any person, except to the benefit of importers who can apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. This means that while the TCO benefits importers by reducing their customs duty liability, it does not impose any new liabilities or disadvantages on any other parties, including previous importers who may be entitled to refunds for duties paid prior to the TCO coming into effect.