EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0813446
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.
Mcnaughtans Pty Ltd applied for a TCO in respect of certain vinyl floor coverings on 18 June 2008.
Instrument
TCO No 0813446 was made on 08 September 2008. It declares that those certain vinyl floor coverings 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. 0813446 is taken to have come into force on 18 June 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 Parliament of Australia, addresses the need for a flexible mechanism to adjust customs duty rates based on market conditions and the availability of domestically produced substitutes. The Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, enabling the application of lower rates of customs duty on certain imported goods. The policy objective is to facilitate access to imported goods that are not produced in Australia, thereby supporting economic efficiency and consumer choice. The explanatory statement for Tariff Concession Instrument No. 0813446, made under the Act, details the process for Mcnaughtans Pty Ltd's successful application for tariff concessions on certain vinyl floor coverings, which now benefit from a reduced customs duty rate of free, effective from the date the application was lodged, 18 June 2008.
Scope and Application
The Customs Act 1901, as amended, provides for the creation of Tariff Concession Orders (TCO) under Part XVA, which apply to specific goods imported into Australia, offering reduced or waived customs duties. This mechanism is designed to encourage the importation of goods that are not produced domestically, provided that they meet certain criteria. Specifically, the Chief Executive Officer of Customs (CEO) must determine whether an application for a TCO aligns with these criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business. Should the CEO find the application valid, they are required to issue a written TCO, effectively altering the duty on the specified goods as per the Customs Tariff Act 1995. For example, Mcnaughtans Pty Ltd's application for tariff concessions on certain vinyl floor coverings resulted in a TCO that effectively granted these goods a duty-free status. This concession is applicable nationwide, encompassing all states and territories within the Commonwealth of Australia, and it takes effect from the date of the application, in this case, 18 June 2008. Notably, the TCO does not adversely affect existing rights of non-Commonwealth entities nor impose any new liabilities on them. Rather, it primarily benefits importers by potentially allowing them to seek refunds on duties paid prior to the TCO's effective date.
Key Provisions
The Tariff Concession Instrument No. 0813446 operates under section 269F of the Customs Act 1901, which allows for applications to be made to the Chief Executive Officer of Customs (CEO) for Tariff Concession Orders (TCO). When Mcnaughtans Pty Ltd applied for a TCO on 18 June 2008, the CEO assessed whether the application met the core criteria specified in section 269C of the Act. This involves determining that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) of the Act mandates that if these criteria are met, the CEO must issue a TCO. In this case, the CEO confirmed that no substitutable goods were being produced in Australia for the specific vinyl floor coverings, leading to the issuance of TCO No. 0813446 on 8 September 2008.
The obligations placed on the CEO under this Act include the necessity to publish a notice in the Gazette as soon as practicable after accepting a valid TCO application. This notice must include an invitation for any interested parties to lodge submissions opposing the TCO. In this instance, the CEO did not receive any submissions against the TCO for the vinyl floor coverings. The TCO itself has the effect of reducing the customs duty on the specified goods from a general rate of 5% to free, provided that the goods are imported after the TCO has come into force on the date of the application, 18 June 2008. The rights of any person other than the Commonwealth are not affected by this TCO as it does not impose any new liabilities or disadvantage existing rights.
Section 269S(1) of the Act dictates that a TCO comes into force on the day the application is lodged. Consequently, TCO No. 0813446 applies from 18 June 2008. Importers can benefit from this TCO by applying for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations. The Act ensures that the TCO does not impose any liabilities on any person and does not disadvantage any existing rights as of the date of registration. There are no specific offences, penalties, or civil/criminal consequences outlined in the explanatory statement for breach of the TCO provisions. However, any failure to comply with the requirements of the Customs Act 1901 or the associated regulations could result in penalties under the general provisions of the Act.