EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702171
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.
Cardinal Health Australia Pty Ltd applied for a TCO in respect of certain surgical gloves on 4 May 2007.
Instrument
TCO No 0702171 was made on 13 July 2007. It declares that those certain surgical gloves 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 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. 0702171 is taken to have come into force on 4 May 2007.
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, established a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act was introduced to address the need for a mechanism that could reduce customs duty rates on specific goods, thereby encouraging trade and economic efficiency. The explanatory statement for Tariff Concession Instrument No. 0702171, issued on 13 July 2007, indicates that the legislation aims to facilitate tariff concessions for goods that are not produced domestically or do not have substitutable alternatives within Australia. This policy objective seeks to support industries by reducing the cost of imported goods, thus promoting competitive pricing and market access for businesses such as Cardinal Health Australia Pty Ltd, who applied for concessions on surgical gloves. The TCO ensures that the rights of importers are preserved and that they can apply for refunds on duties paid before the concession order's effective date.
Scope and Application
The Tariff Concession Instrument No. 0702171 under the Customs Act 1901 provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on certain goods, effectively reducing the rate of customs duty for those goods. This Act applies to any person or entity seeking a tariff concession for goods that are not specified in section 269SJ of the Customs Act 1901, which excludes certain goods from being eligible for a tariff concession. The application of this Act is national, as it falls under the jurisdiction of the Commonwealth of Australia. The Act extends its application through subordinate instruments, specifically the Customs Tariff Act 1995, which specifies the prescribed items to which the tariff concessions apply. The TCO in question was applied to surgical gloves, reducing their duty from 7.5% to 0%, effective from 4 May 2007, the date the application was lodged. The Act ensures that the TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any new liabilities on individuals or entities.
Key Provisions
The Tariff Concession Instrument No. 0702171, made under the Customs Act 1901, applies to certain surgical gloves by reducing the customs duty from 7.5% to 0% (section 269P(3)). This reduction is effective from the date the application was lodged, which in this case was 4 May 2007 (subsection 269S(1)). The instrument specifies that the goods in question are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995. To qualify for such a concession, the application must meet the core criteria set out in section 269C of the Customs Act, which requires that no substitutable goods are produced in Australia on the day the application is lodged.
Entities or individuals applying for a Tariff Concession Order (TCO) must ensure that the goods they are applying for are not listed in section 269SJ of the Customs Act, which details goods that cannot be subject to a TCO (subsection 269K(1)). Furthermore, the Chief Executive Officer of Customs (CEO) must be satisfied that no substitutable goods are produced in Australia in the ordinary course of business at the time of application (section 269C). In this case, the CEO accepted Cardinal Health Australia Pty Ltd's application for the surgical gloves, confirming that no substitutable goods were produced in Australia.
Failure to comply with the requirements of the Customs Act 1901 in relation to TCO applications may result in various consequences. If the CEO determines that an application does not meet the core criteria, the application may be rejected. Additionally, any entity that knowingly provides false information in an application may face legal action, including fines and other penalties (section 288). The Act does not specify maximum penalties for breaches but generally, penalties for providing false information in customs-related matters can be substantial, both in civil and criminal contexts, depending on the severity and intent of the breach.
The Customs Act 1901 also imposes procedural obligations, such as the requirement for the CEO to publish a notice in the Gazette inviting submissions if there are reasons why the TCO should not be made (subsection 269K(1)). In this instance, the CEO did not receive any submissions in response to the notice. The TCO does not affect the rights of any person except the Commonwealth and does not impose any liabilities on any person for actions taken before the TCO's registration date (subsection 269S(1)). Importers, however, can benefit by applying for a refund of duty on goods imported since the effective date of the TCO.