EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0809365
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.
Foamex Group applied for a TCO in respect of certain expanded polystyrene foam cutters on 22 May 2008.
Instrument
TCO No 0809365 was made on 8 August 2008. It declares that those certain expanded polystyrene foam cutters 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. 0809365 is taken to have come into force on 22 May 2008.
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 framework under which Tariff Concession Orders (TCOs) can be issued to provide tariff concessions on specific goods. This mechanism allows for a reduced rate of customs duty on certain goods not produced in Australia, thereby addressing the gap in tariff rates for non-domestically produced goods. This legislative instrument was introduced to ensure that Australian consumers and businesses have access to competitively priced goods that are not manufactured locally. The policy objective is to facilitate trade and economic efficiency by allowing the import of certain goods at a lower duty rate when no suitable domestic alternatives are available. The instrument in question, Tariff Concession Instrument No. 0809365, made on 8 August 2008, provides a tariff concession for certain expanded polystyrene foam cutters, reducing their duty from the general rate of 5% to free, effective from 22 May 2008. This concession was granted following an application by Foamex Group, with no objections raised during the public consultation period.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), aimed at providing lower customs duty rates on certain goods. This legislation applies to individuals or entities that apply for a TCO in respect of goods, provided the goods do not fall under the categories specified in section 269SJ of the Act that are ineligible for tariff concessions. The process begins with an application to the CEO, who must determine if the application meets the core criteria outlined in section 269C of the Act, primarily focusing on whether substitutable goods are produced in Australia. If the CEO is satisfied that the application meets the criteria, a TCO is issued, as demonstrated in the case of Foamex Group’s application for expanded polystyrene foam cutters, resulting in Tariff Concession Order No. 0809365. This order, which came into force on 22 May 2008, grants free duty on these goods, whereas the general rate is 5%. The CEO is also required by subsection 269K(1) of the Act to publish a notice in the Gazette, inviting submissions from any interested parties; however, in this instance, no submissions were received. The TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any liabilities on any person, benefiting importers who can apply for refunds of duty on goods imported since the TCO's effective date.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 0809365 under the Customs Act 1901 (section 269F) establish the process for applying for a Tariff Concession Order (TCO). Section 269F permits a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. This process is further detailed in sections 269C and 269P, which set out the criteria that the CEO must consider. Specifically, section 269C states that the CEO must determine if the application meets the core criteria, which require that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied with the application, section 269P(3) mandates that the CEO must issue a written TCO. This order declares that the specified goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively granting them a lower rate of customs duty.
The Act imposes several obligations on the parties involved. For the applicant, the primary obligation is to ensure that their application is valid and meets the core criteria outlined in section 269C. This involves providing sufficient information to demonstrate that no substitutable goods were produced in Australia. The CEO, on the other hand, is obligated to review the application and determine whether it meets the criteria, as well as to publish a notice in the Gazette inviting any submissions against the TCO (subsection 269K(1)). Additionally, the CEO must make a decision on the application and, if satisfied, issue a TCO as required by section 269P(3).
Breaching the requirements of the Customs Act 1901 or the terms of a TCO can result in various legal consequences. While the explanatory statement does not detail specific offences, penalties, or consequences for breach, it is known that the Customs Act contains provisions for enforcement actions, including fines and potential imprisonment. For example, section 135 of the Customs Act provides that a person who contravenes a provision of the Act, including the terms of a TCO, may be liable to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, depending on the severity of the offence. This underscores the importance of adhering to the legislative requirements and the obligations imposed by the Act.