EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0914954
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.
Multigate Medical Products applied for a TCO in respect of certain wadding balls on 05 May 2009.
Instrument
TCO No 0914954 was made on 24 July 2009. It declares that those certain wadding balls 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. 0914954 is taken to have come into force on 05 May 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 Tariff Concession Instrument No. 0914954 was enacted in 2009 under the Customs Act 1901 to address a specific need for tariff concessions on certain goods, which in this case are certain wadding balls. The Act allows for the application of a lower rate of customs duty on goods specified in a Tariff Concession Order (TCO), provided that certain criteria are met, notably the absence of substitutable goods produced in Australia. This legislative instrument was introduced to provide relief to importers of these particular goods by granting them a tariff concession, which reduces their customs duty from the general rate of 5% to free. The instrument was initiated by an application from Multigate Medical Products and was processed by the Chief Executive Officer of Customs, who, after determining that no substitutable goods were produced in Australia, made the written order declaring the application valid. The policy objective behind this measure was to support importers by reducing their costs without imposing any additional liabilities or disadvantaging other persons.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders, applies to the importation of goods for which a concession in customs duty has been sought and granted by the Chief Executive Officer of Customs. Specifically, the Act facilitates the application process for businesses seeking reduced duty rates on certain goods provided they meet the core criteria set out in the Act, which includes ensuring that no substitutable goods are produced in Australia. The geographic reach of this Act is national, with its provisions applying across Australia. Exclusions under the Act pertain to goods specified in section 269SJ, which are ineligible for tariff concessions. The Act extends its application through subordinate instruments, such as the Customs Tariff Act 1995, which prescribes the duty rates in Schedule 4. For instance, Tariff Concession Order No. 0914954 pertains to certain wadding balls, which are now subject to a free duty rate instead of the general 5% rate. The application process for a TCO involves public consultation, with an opportunity for interested parties to submit objections, although in this case, no submissions were received. The TCO comes into force on the date of the application, ensuring that the rights of importers are protected, and any previously imported goods can be subject to duty refunds under specific regulations.
Key Provisions
The Tariff Concession Order (TCO) No. 0914954, issued under section 269P(3) of the Customs Act 1901, applies a concessional rate of customs duty to certain wadding balls. This concession is made on the condition that no substitutable goods are produced in Australia, as outlined in section 269C of the Act. The TCO specifies that these particular wadding balls are to be treated as item 50 of Schedule 4 to the Customs Tariff Act 1995, which sets the duty rate at free, as opposed to the general rate of 5%. This means that importers of these goods can benefit from the reduced duty rate, provided the goods meet the criteria set forth in the TCO.
The process for obtaining a TCO begins with an application to the Chief Executive Officer of Customs (CEO), as detailed in section 269F of the Customs Act 1901. The CEO must ensure the application does not pertain to goods excluded under section 269SJ and must confirm that no substitutable goods are produced in Australia on the day the application is lodged. If these conditions are satisfied, the CEO is obligated to issue a written TCO, as stipulated in section 269P(3). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties, although in this case, no submissions were received, as mentioned in subsection 269K(1) of the Act.
In terms of obligations, the Customs Act 1901 imposes specific duties on the CEO when processing a TCO application. The CEO must ensure the application complies with the legislative criteria and must conduct a public consultation by publishing a notice in the Gazette. If the application meets the criteria, the CEO must issue the TCO promptly. The TCO itself does not affect the rights of any person other than the Commonwealth as at the date of registration, nor does it impose any liabilities on any person, as clarified under subsection 269S(1). Importers of the affected goods can apply for a refund of duty under paragraph 126(1)(r) of the Regulations for imports made since the TCO came into effect on 05 May 2009.
Failure to comply with the provisions of the Customs Act 1901 or the terms of the TCO may lead to civil or criminal penalties. However, the specific penalties for breaches are not detailed in the Explanatory Statement. Typically, breaches of the Customs Act 1901 can result in substantial fines and, in serious cases, imprisonment. The Act also provides for civil remedies, including the recovery of unpaid duties and interest. The precise penalties for non-compliance with the TCO are not outlined in the explanatory statement, but they are likely to mirror those of the Customs Act 1901.