EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0713580
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.
Temples Florist applied for a TCO in respect of certain water absorbent phenolic foam on 24 August 2007.
Instrument
TCO No 0713580 was made on 2 November 2007. It declares that those certain water absorbent phenolic foam 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. 0713580 is taken to have come into force on 24 August 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 Parliament of Australia, facilitates the application of tariff concessions to certain imported goods through the mechanism of Tariff Concession Orders (TCOs). This legislation was introduced to address the need for a streamlined process to reduce customs duty on specific goods, provided no substitutable goods are produced in Australia. The Tariff Concession Instrument No. 0713580, enacted in 2007, is an example of this process in action, aimed at granting tariff concessions to Temples Florist for certain water absorbent phenolic foam, reducing the general duty rate of 5% to 0%. The process involves the Chief Executive Officer of Customs evaluating applications against core criteria, with a focus on ensuring that the concession does not disadvantage Australian producers by making locally-produced alternatives uncompetitive. This legislative framework seeks to balance the interests of importers and local industries by ensuring that tariff reductions are granted judiciously.
Scope and Application
The Tariff Concession Instrument No. 0713580 under the Customs Act 1901 applies to the specific goods, in this case certain water absorbent phenolic foam, that are subject to a Tariff Concession Order (TCO). The Act allows for the CEO of Customs to reduce or eliminate customs duty on particular goods if they meet the core criteria, including the absence of substitutable goods produced in Australia in the ordinary course of business. The geographic reach of this legislation is national, as it falls under the Commonwealth's authority. The application process is open to any person, including businesses like Temples Florist who applied for the concession. The TCO does not disadvantage any existing rights of non-Commonwealth persons nor impose new liabilities, and its effects are limited to the specified goods. Any exclusions or limitations are those specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The application of this Act may be extended or refined through subordinate instruments such as regulations.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, 269F, 269P, 269S, and 269SJ. Section 269F allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a TCO for specific goods. The CEO must then determine if the application meets the core criteria outlined in section 269C, which requires that on the date the application was lodged, no substitutable goods were produced in Australia. Sections 269B, 269D, and 269E define key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the CEO is satisfied that the application meets these criteria, they must make a written order under section 269P(3) that specifies the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
The Act imposes several obligations and requirements on the parties involved in the TCO process. The CEO of Customs is required to publish a notice in the Gazette, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission, as per section 269K(1). Additionally, the CEO must ensure that the application does not pertain to goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. The CEO also has to confirm that no substitutable goods were produced in Australia on the date the application was lodged. Moreover, the CEO must make the TCO if the application meets the core criteria, specifying the applicable duty rate from Schedule 4 to the Customs Tariff Act 1995.
Failure to comply with the requirements set out in the Customs Act 1901 can result in various offences and penalties. The Act does not explicitly state the penalties for non-compliance with the TCO process, but breaches of other sections of the Customs Act 1901 can incur significant fines and imprisonment. For instance, making a false statement or providing false information in connection with a customs matter can result in a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. Furthermore, any person who knowingly contravenes a provision of the Act or the Customs Tariff Act 1995 may be subject to civil or criminal proceedings. The severity of the penalties depends on the nature and extent of the breach.