EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0834526
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.
Ed Oates Pty Ltd applied for a TCO in respect of certain cleaning pads on 08 October 2008.
Instrument
TCO No 0834526 was made on 14 January 2009. It declares that those certain cleaning pads 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. 0834526 is taken to have come into force on 08 October 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, provides a framework for the administration of customs duties, including a provision for Tariff Concession Orders (TCOs) under Part XVA. This mechanism was introduced to address the problem of potentially high customs duties on imported goods that are not produced domestically, thereby encouraging trade and ensuring competitive pricing. The Tariff Concession Instrument No. 0834526, which was issued on 14 January 2009, exemplifies this process by applying to certain cleaning pads, granting them a free duty rate as of the date of the application on 8 October 2008. The policy objective is to support economic efficiency and consumer benefit by reducing the cost of imported goods through tariff concessions, provided no substitutable goods are produced in Australia.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the framework for Tariff Concession Orders (TCOs), which are issued by the Chief Executive Officer of Customs to reduce customs duty rates on certain goods. These concessions are applicable to goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. To qualify for a TCO, an applicant must demonstrate that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The Act defines 'substitutable goods' as those that are produced in Australia and can be used in the same way as the goods in question. The application process requires the CEO to assess whether the core criteria are met, after which a written order is issued if satisfied. The TCO applies nationally and the instrument is effective from the date of application lodging, with no retroactive liabilities imposed. Importers of the affected goods are entitled to apply for a refund of duties paid from the effective date of the TCO. The legislation does not disadvantage any existing rights of persons other than the Commonwealth.
Key Provisions
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). Under section 269F of the Act, a person can apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which outlines the types of goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), specified in the order.
In this context, the core criteria under section 269C of the Act require that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. As defined by sections 269D and 269E of the Act, ‘goods produced in Australia’ and ‘ordinary course of business’ have specific meanings, while ‘substitutable goods’ means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use to which the goods the subject of the application can be put. If the CEO is satisfied that the application meets these criteria, they must make a TCO.
Section 269P(3) of the Act requires the CEO to make a written order if they are satisfied that the application meets the core criteria. For example, Ed Oates Pty Ltd applied for a TCO in respect of certain cleaning pads on 8 October 2008. TCO No. 0834526 was made on 14 January 2009, declaring that these cleaning pads 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%, but the rate of duty for the goods subject to the TCO is free.
The Act imposes several obligations and requirements on the parties it governs. Firstly, section 269K(1) of the Act requires the CEO to publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application, inviting any person who considers there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO must also ensure that the rights of a person (other than the Commonwealth) are not adversely affected by the TCO as at the date of registration, and that no liabilities are imposed on any person in respect of anything done or omitted to be done before the date of registration. Any person who breaches the Act may face civil or criminal consequences, and the maximum penalties for such breaches are specified in the relevant sections of the Act.