EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0933033
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 surgery preparation sponge on 07 September 2009.
Instrument
TCO No 0933033 was made on 20 November 2009. It declares that those certain surgery preparation sponge 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. 0933033 is taken to have come into force on 07 September 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. 0933033 was enacted under the Customs Act 1901, introduced to address the issue of allowing tariff concessions for specific goods that are not produced domestically in Australia. This instrument facilitates a lower rate of customs duty on certain imported goods, providing economic benefits to businesses and consumers. The Act, enacted by the Commonwealth Parliament, outlines the process for applying for tariff concessions and establishes the criteria that must be met for such concessions to be granted by the Chief Executive Officer of Customs. The primary policy objective is to support Australian businesses by ensuring that they can access necessary goods at a reduced cost, thereby enhancing their competitiveness without the burden of high customs duties on specific items.
The Explanatory Statement for Tariff Concession Instrument No. 0933033 clarifies that the instrument was made in response to an application by Multigate Medical Products for a tariff concession on certain surgery preparation sponges. The instrument was published in the Gazette with an invitation for submissions, although none were received. The tariff concession took effect on the date the application was lodged, 7 September 2009, and provides a duty-free status for the specified goods, reducing the general duty rate of 5% to zero. Importantly, the concession does not affect any existing rights or impose new liabilities on individuals or entities, except for potential benefits to importers who can apply for duty refunds on goods imported since the concession came into force.
Scope and Application
The Tariff Concession Instrument No. 0933033, made under the Customs Act 1901, applies to certain surgery preparation sponges as specified in the instrument. This Act allows for the application of a lower rate of customs duty on goods that are the subject of a Tariff Concession Order (TCO). The application of this instrument is specifically directed towards entities or individuals involved in the importation of the designated goods, aiming to facilitate the import process by reducing customs duty. The geographic reach of the Act is national, as it applies across Australia under the Commonwealth jurisdiction. The instrument was made on 20 November 2009, and it is effective from the date the application was lodged on 7 September 2009, in accordance with the Act's provisions. The instrument does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. The rights of importers are positively affected as they can apply for a refund of duty on goods imported since the date the TCO came into force. The CEO of Customs has the authority to make such orders if certain criteria are met, and the process includes a period for public consultation, although no submissions were received in this instance.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0933033 are sections 269C, 269F, 269P, and 269SJ of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria, which include the absence of substitutable goods produced in Australia (section 269C), a TCO is made (section 269P). Section 269SJ specifies goods that cannot be subject to a TCO. In this case, the CEO was satisfied that Multigate Medical Products' application for a TCO for certain surgery preparation sponges met the core criteria, and thus, a TCO was issued on 20 November 2009, declaring that the specified goods are to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, resulting in a duty-free rate for these goods.
The obligations imposed on the parties governed by this Act include the requirement for applicants to ensure their applications meet the core criteria, such as demonstrating that no substitutable goods are produced in Australia. The CEO has the duty to assess the application against these criteria and, if satisfied, to make a TCO. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made. This notice was published for TCO No. 0933033, but no submissions were received.
In terms of potential breaches and consequences, while the Act does not explicitly detail specific offences or penalties for failure to comply with the TCO provisions, general penalties for breaches of the Customs Act 1901 can apply. These may include fines or imprisonment. For example, knowingly making a false statement in an application for a TCO could result in criminal penalties under section 279 of the Customs Act 1901, which includes fines of up to $22,200 or imprisonment for up to two years, or both. Additionally, failure to comply with the conditions of the TCO once it has been granted could also lead to financial penalties or other legal consequences under the Customs Act.
The Customs Act 1901 and its regulations also provide for the recovery of duties and other charges where goods are imported without a valid TCO or in contravention of the terms of a TCO. Importers who fail to avail themselves of the benefits of a TCO or who import goods in breach of the terms of a TCO may be liable for the duty that would have been payable but for the TCO, plus interest and any applicable penalties. The Act ensures that the rights of importers are beneficially affected by the TCO, and importers can apply for a refund of duty on goods imported since the effective date of the TCO, which in this instance is 7 September 2009.