EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707644
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.
Sleepcraft Distributors Pty Ltd applied for a TCO in respect of certain mattress protectors on 30 May 2007.
Instrument
TCO No 0707644 was made on 10 August 2007. It declares that those certain mattress protectors 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. 0707644 is taken to have come into force on 30 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 was amended by the Tariff Concession Instrument No. 0707644, introduced in 2007 to provide a pathway for the application of tariff concessions on certain imported goods. The Act, as enacted by the Australian Parliament, provides for the establishment of a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, reducing the rate of customs duty on goods that meet specific criteria. The problem this legislation addresses is the need for a structured process to grant tariff concessions on goods that are not produced domestically, ensuring that such concessions do not disadvantage local producers while providing relief to importers and consumers. The policy objective is to facilitate the importation of goods that are not manufactured in Australia, thereby potentially lowering the cost of these goods and benefiting consumers. This legislative instrument was enacted to formalise the process for making such tariff concessions, ensuring that they are applied fairly and in accordance with the provisions of the Customs Act 1901.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to goods specified in an application made by a person, provided the goods do not fall under the restricted list outlined in section 269SJ of the Act. The application is evaluated against the core criteria set out in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The CEO's decision to issue a TCO is predicated on satisfying these conditions and the absence of objections from the public, as invited by the notice published in the Gazette. This particular TCO, No. 0707644, concerns certain mattress protectors, reducing the duty rate from 7.5% to 0% as it was determined that no substitutable goods were produced domestically. The TCO took effect on the date the application was lodged, 30 May 2007, and while it confers benefits to importers by potentially allowing duty refunds, it does not impose any liabilities or adversely affect the rights of any person other than the Commonwealth.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0707644 (the Instrument) under the Customs Act 1901 (the Act) involve the granting of tariff concession orders (TCOs) by the Chief Executive Officer of Customs (the CEO) (section 269C). Specifically, the Instrument declares that certain mattress protectors are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, reducing the rate of customs duty from 7.5% to 0% (section 269P(3)). This concession applies to goods imported from the date the TCO is taken to have come into force, which is the date the application was lodged (section 269S(1)).
The obligations and requirements imposed by the Act on parties include the application process for a TCO (section 269F), ensuring that the goods are not specified in section 269SJ of the Act, and meeting the core criteria set out in section 269C. The CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). For this particular Instrument, the CEO did not receive any submissions in response to the published notice.
Under the Act, there are specific consequences for breaches related to TCOs. While the explanatory statement does not explicitly detail offences or penalties for failing to comply with TCOs, it is implied that any improper application or use of a TCO could result in the duty payable reverting to the standard rate. The Act does not impose liabilities on any person for actions taken before the date of the TCO’s registration, and the rights of importers will be beneficially affected, allowing them to apply for refunds of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).