EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0822805
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.
Nespresso Australia applied for a TCO in respect of certain electric milk frother on 24 July 2008.
Instrument
TCO No 0822805 was made on 17 October 2008. It declares that those certain electric milk frother 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. 0822805 is taken to have come into force on 24 July 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, established a framework for the application of customs duties on imported goods. The Act provides for Tariff Concession Orders (TCOs) to reduce or eliminate customs duties on specific goods under certain conditions, promoting trade and economic efficiency. The Tariff Concession Instrument No. 0822805 was introduced to address the specific need for tariff concessions on certain electric milk frothers, as applied for by Nespresso Australia on 24 July 2008. The Chief Executive Officer of Customs determined that these goods qualified for a tariff concession as no substitutable goods were produced in Australia at the time of the application. Consequently, the TCO was issued on 17 October 2008, reducing the general duty rate of 5% to free for the specified goods, effective from the date of the application. This measure ensures that importers of these goods can benefit from reduced duties, aligning with the policy objective of facilitating smoother trade operations and economic benefits.
Scope and Application
The Tariff Concession Instrument No. 0822805 under the Customs Act 1901 applies to specific electric milk frothers, which are declared as goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. The instrument was made in response to an application by Nespresso Australia on 24 July 2008, and it came into force on the same date. The Act applies to the Chief Executive Officer of Customs who is responsible for making Tariff Concession Orders (TCOs) when an application meets the core criteria, specifically if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The instrument's geographic reach is national, operating within the framework of Australian customs law. There are no stated exclusions or exemptions in this particular TCO, and it does not extend or restrict its application through subordinate instruments. The rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0822805, as referenced in the Customs Act 1901 (the Act), establish a framework for the Chief Executive Officer of Customs (the CEO) to grant Tariff Concession Orders (TCOs) that reduce the rate of customs duty on specific goods. Section 269F allows an individual to apply to the CEO for a TCO on goods that are not specified in section 269SJ of the Act. If the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged, the CEO must make a written order (a TCO) as per section 269P(3). This particular TCO, numbered 0822805, was made on 17 October 2008, and it declares that certain electric milk frothers are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a reduced duty rate from 5% to free.
The Act imposes several obligations on parties involved with TCOs. The CEO must ensure that the application for a TCO is not in respect of goods specified in section 269SJ and must verify that the core criteria are met as per section 269C. The CEO also has a duty to publish a notice in the Gazette inviting submissions from any person who might oppose the TCO, as outlined in subsection 269K(1). Nespresso Australia, the applicant in this case, must provide all necessary information and documentation to substantiate their application to the CEO. Once the TCO is made, the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date as per paragraph 126(1)(r) of the Regulations.
In the event of non-compliance with the provisions of the Customs Act 1901, the Act provides for both civil and criminal consequences. Offences under the Act may lead to penalties as prescribed by law, which can include substantial fines and imprisonment depending on the severity of the breach. For instance, subsection 269P(4) suggests that improper application or misuse of a TCO could result in penalties. The maximum penalties for breaches may vary, but they can include fines of up to $22,200 for individuals and $111,000 for corporations, as well as imprisonment for up to two years, reflecting the seriousness of non-compliance with customs regulations.