EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619977
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 surgical gauze balls on 19 December 2006.
Instrument
TCO No 0619977 was made on 09 March 2007. It declares that those certain surgical gauze balls 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 free.
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. 0619977 is taken to have come into force on 19 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 was enacted to provide for the administration of customs and excise, including the collection of duties and taxes. One of the significant gaps the Act aimed to address was the need for a streamlined process to provide tariff concessions on imported goods, ensuring that Australian consumers and businesses could access necessary goods at reduced costs. The Customs Act 1901, through Part XVA, established a framework for Tariff Concession Orders (TCOs) to be made by the Chief Executive Officer of Customs. The objective is to allow for reduced customs duty rates on specific goods, provided that no substitutable goods are produced in Australia. This system helps to promote economic efficiency and consumer access to a broader range of goods. The Parliament of Australia enacted this legislation to facilitate smoother trade and to ensure that Australian industries are not unduly protected at the expense of consumers.
Scope and Application
The Tariff Concession Instrument No. 0619977, enacted under the Customs Act 1901, applies to individuals and entities seeking tariff concessions for specific goods, in this case surgical gauze balls, through the application process governed by the Chief Executive Officer of Customs (CEO). The application was lodged by Multigate Medical Products Pty Ltd on 19 December 2006, and the instrument was made on 9 March 2007, effective from the application date. The instrument exempts these particular surgical gauze balls from the general customs duty rate of 7.5%, setting the duty rate at free. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the concession, and importers of the goods can apply for duty refunds from the effective date of the instrument. The instrument does not impose any liabilities on any person.
Key Provisions
The main operative sections of the Customs Act 1901 that are relevant to this Tariff Concession Order (TCO) include sections 269C, 269B, 269D, 269E, 269F, 269P, 269SJ, and 269K. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C stipulates that a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO).
Under this legislation, the CEO has specific obligations. Upon receiving a valid TCO application, the CEO must determine whether the application meets the core criteria, specifically ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If the criteria are met, the CEO is required to make a written TCO. Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. In this case, the CEO did not receive any submissions in response to the notice.
Breaching the requirements of the Customs Act 1901 can result in various consequences. While the Act does not explicitly state civil or criminal penalties for failing to comply with the TCO provisions, non-compliance with customs regulations generally can lead to penalties. For example, under the Customs Act, knowingly making a false statement or providing false information can lead to fines of up to $22,200 for individuals and $111,000 for corporations. Additionally, if an importer fails to apply for a refund of duty under the circumstances outlined in the Regulations, they may be liable for the unpaid duty, plus interest and any additional penalties.
Overall, the legislation clearly outlines the process for applying for and granting a TCO, ensuring that goods which meet the specified criteria receive tariff concessions. The obligations imposed on the CEO include assessing applications, making written orders where appropriate, and providing a notice in the Gazette to allow for public submissions. Failure to adhere to the requirements can result in significant financial penalties.