EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0911155
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 giftboxed coffee set on 02 April 2009.
Instrument
TCO No 0911155 was made on 29 June 2009. It declares that those certain giftboxed coffee set 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. 0911155 is taken to have come into force on 02 April 2009.
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, addresses the need for a regulatory framework governing customs duties and related activities in Australia. This Act facilitates the establishment of a tariff concession scheme where specific goods can benefit from reduced customs duties, as outlined in Part XVA. The policy objective is to ensure fair trade practices by providing relief to importers of goods that do not have Australian substitutes, thereby promoting competition and economic efficiency. The Tariff Concession Order (TCO) process allows for the application of lower duty rates to certain goods, contingent on the absence of substitutable Australian-produced alternatives. Nespresso Australia's application for a TCO concerning certain giftboxed coffee sets exemplifies this mechanism, where the application was accepted and processed, leading to the issuance of TCO No. 0911155 on 29 June 2009, which made the specified goods duty-free. This order was implemented from the date of the application, 2 April 2009, without retroactive financial impact on any party except for providing potential duty refunds to importers.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which apply a lower rate of customs duty to specific goods. This legislation applies to individuals or entities that seek to import goods that are eligible for tariff concessions, provided they meet the core criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. The geographic reach of this Act is national, as it operates under the Commonwealth jurisdiction. However, certain goods are explicitly excluded from TCO eligibility as per section 269SJ. The application process involves an assessment by the CEO to determine if the applicant's goods meet the specified criteria, which includes ensuring no substitutable goods are produced domestically in the ordinary course of business. Once a TCO is issued, it provides relief from the general duty rates, as seen in the case of Nespresso Australia's application for a certain giftboxed coffee set, where the duty rate was reduced from 5% to free. The TCO does not disadvantage or impose liabilities on individuals or entities for actions taken before its registration, and importers can apply for duty refunds from the date the TCO comes into force.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0911155 under the Customs Act 1901, as described in the explanatory statement, include sections 269F, 269C, and 269P(3) (section 269F). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) concerning specific goods. If the CEO is satisfied that the application complies with the Act and is not in respect of goods specified in section 269SJ, which lists goods ineligible for a TCO, the CEO must assess whether the application meets the core criteria set out in section 269C. If these criteria are met, as per section 269P(3), the CEO must issue a written TCO declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995, thereby applying a concessional rate of duty.
The obligations and requirements imposed by the Act on the parties or entities it governs include the necessity for an application to be made by a person to the CEO for a TCO in accordance with section 269F. The CEO must ensure that the application is not in respect of goods listed in section 269SJ and must verify that no substitutable goods were produced in Australia on the day the application was lodged, as per section 269C. Additionally, the CEO is mandated to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted, as stipulated in subsection 269K(1). The CEO must also ensure that the TCO does not affect the rights of any person other than the Commonwealth adversely and does not impose liabilities on any person, as per the commencement provisions in subsection 269S(1).
The explanatory statement outlines the consequences for breach of the provisions under the Customs Act 1901. There are no explicit references to offences, penalties, or civil/criminal consequences for breach of the TCO provisions in the explanatory statement. However, the Act and its associated regulations likely encompass broader penalties for non-compliance with customs duties and regulations, which may include fines or imprisonment for serious breaches. The precise penalties would depend on the specific regulations and the nature of the breach.