EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707018
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.
Selleys Pty Ltd applied for a TCO in respect of certain cleaning cloths on 10 May 2007.
Instrument
TCO No 0707018 was made on 20 July 2007. It declares that those certain cleaning cloths 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. 0707018 is taken to have come into force on 10 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 Commonwealth Parliament, provides a framework for the administration of customs and excise. It was introduced to address the need for a systematic approach to the regulation of goods entering and exiting Australia, including the imposition and remission of duties. One specific aspect of this Act is the Tariff Concession Orders (TCO) scheme, which allows for the reduction or elimination of customs duty on certain goods under specific conditions. The Tariff Concession Instrument No. 0707018, introduced in 2007, is an example of this scheme in action. It was made to provide relief to importers of certain cleaning cloths by reducing their customs duty rate from 7.5% to 0%. This measure was implemented to ensure that Australian consumers and businesses could access these goods at a reduced cost, provided that no substitutable goods were being produced domestically. The instrument came into effect on the date the application was lodged, 10 May 2007, and did not impose any new liabilities on individuals or entities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs), which allow for a lower rate of customs duty on specified goods. An application for a TCO can be submitted by any person to the Chief Executive Officer of Customs, who is mandated to consider the application against the core criteria established under section 269C of the Act. A TCO can only be issued if the CEO is satisfied that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The definition of "substitutable goods" is given in section 269D, with "ordinary course of business" further defined in section 269E. If the CEO determines that the application meets the criteria, a written TCO is issued, reducing the duty on the specified goods as per a prescribed item of Schedule 4 to the Customs Tariff Act 1995. This instrument applies nationally across Australia, impacting any entities or individuals involved in the importation of the specified goods. The rights of importers are protected, and the concession does not impose any liabilities on any person other than the Commonwealth.
Key Provisions
The Customs Act 1901, under Part XVA, allows the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on certain goods. If an application for a TCO is made under section 269F and is not disqualified under section 269SJ, the CEO must assess whether the application meets the core criteria set out in sections 269B, 269C, 269D and 269E. Specifically, for an application to meet the criteria, there must be no substitutable goods produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a specified lower duty rate, as outlined in section 269P(3).
The obligations imposed by the Act on the parties involved include the requirement for the CEO to thoroughly assess TCO applications against the criteria and to make an order if the criteria are met. Additionally, the CEO must publish a notice in the Gazette under subsection 269K(1), inviting any interested parties to lodge submissions if they believe the TCO should not be made. This was done for TCO No. 0707018, although no submissions were received. The Act also mandates that a TCO comes into force on the date the application was lodged, as stated in subsection 269S(1).
Breaching the provisions of the Customs Act 1901 or the regulations can result in both civil and criminal consequences. While specific offences under this Act are not detailed in the explanatory statement, it is noted that failure to comply with the terms of a TCO could lead to legal action. The explanatory statement does not specify penalties, but general contraventions of the Customs Act can lead to substantial fines and imprisonment. For instance, under section 269 of the Act, penalties can include fines up to a significant amount and imprisonment for several years, depending on the severity of the breach.
In summary, TCO No. 0707018 effectively reduces the customs duty on certain cleaning cloths to 0% from the general rate of 7.5%, contingent on the CEO's determination that no substitutable goods are produced in Australia. The CEO has a duty to assess applications rigorously and to publish notices inviting public submissions, which was duly followed in this case. The legal obligations ensure that the process is transparent and fair, while any non-compliance with the terms of the TCO could result in substantial civil or criminal penalties.