EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0835438
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.
Outlook Australia Pty Ltd applied for a TCO in respect of certain baby blankets on 14 October 2008.
Instrument
TCO No 0835438 was made on 14 January 2009. It declares that those certain baby blankets 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 10%. 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. 0835438 is taken to have come into force on 14 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 Commonwealth Parliament, provides for the imposition of customs duty on imported goods. It also establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs to reduce or exempt the duty on certain goods. The problem or gap addressed by this legislation is the need for a mechanism to provide tariff relief on goods where there are no substitutable goods produced in Australia. This is to support Australian industries by ensuring that local production is not undermined by cheaper imports. The explanatory statement for Tariff Concession Instrument No. 0835438, made under the Customs Act 1901, clarifies that the instrument was introduced to provide tariff concessions on certain baby blankets, reducing the general duty rate from 10% to free. This was enacted after no submissions were received in opposition to the application by Outlook Australia Pty Ltd, thereby confirming that the policy objective of providing relief without adversely affecting local production was met in this instance.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines a scheme for Tariff Concession Orders (TCOs) which can be applied for by any person seeking to reduce the customs duty on certain goods. The application process involves determining whether the goods in question are substitutable by Australian-produced goods, and if not, the Chief Executive Officer of Customs (the CEO) is obligated to consider whether the application meets the core criteria. Should the CEO find that the application meets these criteria, a written order is issued, reducing the duty rate on the specified goods. This legislation applies to individuals or entities seeking tariff concessions on goods imported into Australia, and it has a Commonwealth reach. It is important to note that the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ. The application of the Act can be further detailed through subordinate instruments, which provide additional guidance and specifications for the implementation of TCOs. The issuance of a TCO does not affect existing rights or impose liabilities on individuals or entities for actions taken prior to the TCO's effective date.
Key Provisions
The primary operative sections of the Customs Act 1901, as it pertains to Tariff Concession Orders (TCOs), include sections 269C, 269F, 269P, and 269S (subsection 269S(1)). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the application is valid and meets the core criteria specified in section 269C, the CEO must make a written order declaring that the goods are subject to a TCO (section 269P(3)). Section 269S(1) stipulates that a TCO is to be considered as coming into force on the day the application is lodged. These sections collectively provide the framework for the process of applying for and granting tariff concessions on specific goods.
The Act imposes certain obligations and requirements on the parties involved in the TCO process. For instance, under section 269C, an application for a TCO meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269E defines 'ordinary course of business', and section 269D defines 'goods produced in Australia'. These definitions are crucial in determining the eligibility of an application. Additionally, the CEO must publish a notice in the Gazette, inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)).
In the case of Outlook Australia Pty Ltd's application for a TCO on certain baby blankets, the CEO determined that no substitutable goods were produced in Australia, thus satisfying the core criteria. Consequently, the CEO issued TCO No. 0835438, declaring that the baby blankets are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free rate. This concession effectively reduces the general rate of duty on these goods from 10% to free.
Under the Customs Act 1901, breaches of the provisions related to TCOs could potentially lead to civil or criminal consequences. However, the Act itself does not explicitly detail the specific offences, penalties, or consequences for non-compliance with the TCO provisions. The penalties would typically be determined by the relevant laws governing customs duties and the administration of the Customs Act. It is important to refer to the broader legislative framework and any related regulations to ascertain the potential penalties for non-compliance, which could include fines or imprisonment depending on the severity of the breach.