EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0935519
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.
Edgar Edmondson applied for a TCO in respect of certain mop heads on 22 September 2009.
Instrument
TCO No 0935519 was made on 27 November 2009. It declares that those certain mop heads 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 7.5%. 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. 0935519 is taken to have come into force on 22 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 Customs Act 1901 was enacted by the Parliament of Australia to regulate the customs and border control aspects of international trade, ensuring a structured approach to the imposition of tariffs and the facilitation of trade. The Act was designed to address the need for a comprehensive legal framework governing the importation and exportation of goods, aiming to streamline customs processes and protect domestic industries by imposing duties on imported goods. The explanatory statement for Tariff Concession Instrument No. 0935519, issued under the Customs Act, details a specific mechanism through which the Chief Executive Officer of Customs can provide tariff concessions on certain goods. This instrument was introduced to address a particular need identified by Edgar Edmondson, who applied for a tariff concession on certain mop heads, resulting in Instrument TCO No. 0935519. This instrument, which came into force on the date the application was lodged, declares that the specified mop heads are subject to a zero rate of duty, benefiting importers by reducing their customs duty liability. The policy objective here is to provide relief to importers by reducing the financial burden of customs duties on specified goods, thereby encouraging trade and potentially reducing the cost of goods for consumers.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for Tariff Concession Orders (TCOs), which are orders that can lower the customs duty on certain goods. This Act applies to individuals or entities that wish to apply for a TCO for specific goods. The scope of this legislation extends to the Commonwealth of Australia and is administered by the Chief Executive Officer of Customs (CEO), who has the authority to decide on TCO applications. The CEO must ensure that the goods in question are not those specified in section 269SJ of the Act, which are ineligible for tariff concessions. Once an application meets the core criteria, notably the absence of substitutable goods produced in Australia, the CEO is required to issue a TCO. The instrument in question, TCO No. 0935519, was made on 27 November 2009, for certain mop heads, reducing their duty rate from 7.5% to free. This order came into effect on the date the application was lodged, 22 September 2009, and does not retroactively affect any existing rights or liabilities, though it does provide for duty refunds to importers for goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901 provides a framework for the creation of Tariff Concession Orders (TCOs), which allow for lower rates of customs duty on specified goods. Section 269F of the Act allows individuals to apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning particular goods, provided the goods are not specified in section 269SJ, which outlines goods ineligible for TCOs. A TCO application must meet the core criteria as stipulated in section 269C; this requires that, on the day the application was submitted, no substitutable goods were produced in Australia in the ordinary course of business. This means that the goods in question should not have Australian-made equivalents that serve the same purpose or design use.
Entities and individuals applying for a TCO must ensure that the goods in question do not have any substitutable products produced in Australia. They need to demonstrate this fact to the CEO, who will then decide if the application meets the criteria for a TCO. Once the CEO is satisfied, a written order is issued under section 269P(3) of the Act, declaring that the goods are subject to a specific item in Schedule 4 of the Customs Tariff Act 1995, effectively reducing the duty rate. In the case of Edgar Edmondson's application for certain mop heads, the CEO confirmed that no substitutable goods were produced in Australia, leading to a TCO that exempts these mop heads from the general 7.5% duty rate, setting it to free.
Under the Act, the CEO is required to publish a notice in the Gazette after accepting a TCO application as valid, inviting any interested party to submit any objections or reasons why the TCO should not be granted. In the case of TCO No. 0935519, no submissions were received in response to this invitation, facilitating the smooth issuance of the order. The TCO becomes effective on the day the application is lodged, as stated in subsection 269S(1) of the Act. Importantly, the TCO does not affect the rights of any person except the Commonwealth in a way that disadvantages them or imposes liabilities for actions taken before the TCO was registered. Importers of the goods subject to the TCO can apply for a refund of duty paid on goods imported since the TCO's effective date.
Failure to comply with the requirements of the Customs Act 1901 and the associated regulations can lead to various consequences. Offences under the Act can attract civil or criminal penalties, depending on the severity and intent of the breach. For instance, knowingly making a false or misleading statement in an application for a TCO can result in a civil penalty of up to $22,200 for an individual and $111,000 for a corporation, as specified under the Act. Additionally, serious breaches may lead to criminal charges, with potential penalties including fines and imprisonment, reflecting the seriousness of the contravention.