EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702549
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.
Bacou-Dalloz Australia Pty Ltd applied for a TCO in respect of certain earplugs on 14 February 2007.
Instrument
TCO No 0702549 was made on 11 May 2007. It declares that those certain earplugs 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 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. 0702549 is taken to have come into force on 14 February 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, establishes a regulatory framework for customs duties and includes provisions for Tariff Concession Orders (TCOs). The primary problem or gap addressed by this Act is the need to facilitate the importation of certain goods by reducing or eliminating customs duties where appropriate, particularly where no substitutable goods are produced in Australia. This mechanism ensures that such goods can enter the Australian market at a lower tariff rate, thereby promoting trade and potentially reducing consumer prices. TCOs are made by the Chief Executive Officer of Customs (CEO) when certain core criteria are met, such as the absence of substitutable goods produced domestically. The policy objective is to support economic efficiency and consumer benefit by making certain imported goods more affordable, as illustrated by the case of the earplugs which now attract a duty rate of free, down from the general rate of 5%.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the scheme through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. This Act applies to entities and individuals who seek to import goods that may be subject to a TCO, which involves applying for a lower rate of customs duty. The Act's application is national in scope, as it operates under the Commonwealth jurisdiction. The Act mandates that a TCO application will only be considered if it does not pertain to goods specified in section 269SJ, which lists goods that are ineligible for tariff concessions. If an application is deemed to meet the core criteria, such as the absence of substitutable goods produced in Australia, the CEO is required to issue a TCO. The Explanatory Statement outlines that once the application is accepted, a written order is issued, declaring that the specified goods are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995, thereby applying a reduced or free rate of customs duty. The process also involves public consultation, where any interested parties can submit objections, although in this case, none were received. The TCOs do not affect existing rights or impose liabilities on individuals or entities other than the Commonwealth, and they beneficially impact importers by allowing them to seek duty refunds for goods imported since the TCO's effective date.
Key Provisions
The Tariff Concession Instrument No. 0702549 made under section 269F of the Customs Act 1901 allows for a lower rate of customs duty on certain earplugs. Specifically, section 269F permits an application for a Tariff Concession Order (TCO) to be made to the Chief Executive Officer of Customs (CEO). Upon receiving an application, the CEO must assess whether it meets the core criteria set out in section 269C. A TCO application meets these criteria if, on the date the application was submitted, no substitutable goods were being produced in Australia in the ordinary course of business. For the purpose of this assessment, 'substitutable goods' are defined in section 269B as goods produced in Australia that serve a similar use to the goods for which the TCO is being applied.
The obligations imposed by the Act on the parties involved are primarily centred around the application and assessment process. For instance, section 269K(1) requires the CEO to publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made, if they believe there are valid grounds. In this case, the CEO did not receive any submissions. Furthermore, once a TCO application is accepted and the core criteria are satisfied, the CEO is mandated to issue a written order declaring the goods subject to the order under section 269P(3).
In terms of the consequences for non-compliance, section 269SJ of the Act specifies certain goods that cannot be subject to a TCO, and any breaches of this provision could potentially lead to civil or criminal penalties. However, the explanatory statement does not detail specific offences or penalties for breach of the TCO itself. Generally, breaches of customs regulations can lead to fines and potential criminal charges, but the exact penalties would depend on the specific nature and severity of the breach. The Tariff Concession Instrument No. 0702549 does not impose any liabilities on any person and does not affect the rights of a person (other than the Commonwealth) as at the date of registration.