EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708197
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.
SCA Hygiene Australasia Pty Ltd applied for a TCO in respect of certain sanitary pad making machine parts on 2 July 2007.
Instrument
TCO No 0708197 was made on 21 September 2007. It declares that those certain sanitary pad making machine parts 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 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. 0708197 is taken to have come into force on 2 July 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 enacted to provide for the collection of customs duty and to control the importation and exportation of goods. The Act, as supplemented by Part XVA, enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply reduced rates of duty on certain goods. Enacted by the Australian Parliament, the Act aims to facilitate trade by providing tariff relief under certain conditions. Tariff Concession Instrument No. 0708197, made on 21 September 2007, is an example of this mechanism, reducing the duty on specific sanitary pad making machine parts from 5% to 0%. This concession was granted after SCA Hygiene Australasia Pty Ltd applied for it, and the CEO determined that no substitutable goods were produced in Australia, meeting the core criteria set out in the Act. The instrument, which came into effect on the day the application was lodged, 2 July 2007, does not disadvantage any person or impose new liabilities, and it allows eligible importers to apply for duty refunds on goods imported since the concession's effective date.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, who is mandated to consider applications from individuals or entities seeking a reduction in customs duty on certain goods. This process is applicable when no substitutable goods are produced in Australia in the ordinary course of business, as outlined in section 269C of the Act. The application must not concern goods specified in section 269SJ, which are ineligible for TCOs. The scope of the Act is national, affecting importers and exporters across Australia who deal with the specified goods, as the concessions granted by a TCO reduce the duty on these goods from the general rate to the rate prescribed in the TCO. The instrument, TCO No. 0708197, applies to specific sanitary pad making machine parts, reducing their duty rate to 0% from the general rate of 5%, and has been in force since the application date of 2 July 2007. The application of this concession does not retroactively affect the rights or impose liabilities on any person other than the Commonwealth.
Key Provisions
The Customs Act 1901 sets up a scheme for Tariff Concession Orders (TCOs) through which lower customs duty rates can be applied to specific goods (s 269F). Applications for TCOs are submitted to the Chief Executive Officer of Customs (CEO) who must decide if the application meets the core criteria (s 269C). A TCO is issued if the CEO determines that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged (s 269C, s 269P(3)). In the case of SCA Hygiene Australasia Pty Ltd, a TCO was granted for certain sanitary pad making machine parts, reducing the duty rate from 5% to 0% (Item 50, Schedule 4, Customs Tariff Act 1995).
The Act imposes certain obligations on applicants and the CEO. Applicants must ensure that their applications meet the core criteria, particularly that no substitutable goods are produced in Australia. The CEO must evaluate applications, decide on their validity, and issue a TCO if the criteria are met (s 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not be made (s 269K(1)). This notice was published for TCO No. 0708197, but no submissions were received.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations can result in various consequences. The Act does not explicitly outline specific offences or penalties for breaches of TCO provisions. However, general penalties for breaches of the Customs Act 1901 may apply, which can include fines and imprisonment. For instance, section 237 of the Act imposes penalties for knowingly making a false statement or representation, which could be relevant in the context of TCO applications. The maximum penalties for such offences can vary, with fines up to 10,000 penalty units and imprisonment for up to 5 years for serious offences. The Act ensures that the rights of non-Commonwealth persons are not adversely affected by the issuance of a TCO, nor does it impose any liabilities on any person for actions taken before the TCO's effective date.