EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0935978
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.
Howard Chia Corporation Pty Ltd applied for a TCO in respect of certain swaddling baby wraps on 24 September 2009.
Instrument
TCO No 0935978 was made on 04 December 2009. It declares that those certain swaddling baby wraps 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. 0935978 is taken to have come into force on 24 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. 0935978, introduced under the Customs Act 1901, aims to address the issue of applying tariff concessions to specific goods that are not produced in Australia and for which there are no substitutable goods. Enacted by the Parliament of Australia, this legislation provides a mechanism for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), thereby allowing for a lower rate of customs duty on certain goods. The policy objective of this instrument is to ensure that the importation of goods that cannot be produced domestically or substituted with Australian-made alternatives is subject to a reduced customs duty, thereby facilitating trade and potentially lowering costs for consumers and businesses.
The Tariff Concession Instrument No. 0935978 was introduced following an application by Howard Chia Corporation Pty Ltd for a TCO concerning certain swaddling baby wraps on 24 September 2009. After considering the application and ensuring no objections were raised during the consultation period, the CEO issued the TCO on 4 December 2009. This TCO declared that the specified swaddling baby wraps would be subject to a duty-free rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, as no substitutable goods were produced in Australia. The TCO came into force on the date of the application, 24 September 2009, and benefits importers by allowing them to apply for refunds of duty on goods imported since that date.
Scope and Application
The Tariff Concession Instrument No. 0935978, made under the Customs Act 1901, applies to the specific case of Howard Chia Corporation Pty Ltd's application for a Tariff Concession Order (TCO) concerning certain swaddling baby wraps. This instrument allows for the application of a lower rate of customs duty, in this instance, reducing the duty from 7.5% to free, for the goods specified in the order. The TCO mechanism is intended for goods that are not substitutable by products manufactured in Australia, thereby encouraging importation where local production is not feasible. The application process involves the Chief Executive Officer of Customs (CEO) assessing whether the goods meet the core criteria, which are defined in sections 269C, 269D, and 269E of the Act. The CEO is required to publish a notice in the Gazette inviting submissions from interested parties, although in this instance, no submissions were received. The TCO comes into effect from the date the application was lodged, providing a retroactive benefit to importers who can apply for a refund of duty on goods imported since that date, without any new liabilities imposed on them or others.
Key Provisions
The Tariff Concession Instrument No. 0935978 under the Customs Act 1901, specifically Section 269P, establishes a Tariff Concession Order (TCO) for certain swaddling baby wraps. This instrument, effective from 24 September 2009, is designed to reduce the customs duty on these goods from the general rate of 7.5% to a rate of zero. This concession is contingent on the condition that no substitutable goods were produced in Australia at the time the application was lodged, as stipulated in Section 269C. The application, submitted by Howard Chia Corporation Pty Ltd, was processed and approved by the Chief Executive Officer of Customs (CEO) who determined that the core criteria were met, thereby authorising the creation of the TCO.
Entities subject to the Act, particularly those importing goods subject to a TCO, must ensure compliance with the conditions set forth in the TCO. The CEO's decision to issue the TCO must be based on a thorough assessment that the goods do not have substitutable counterparts produced in Australia. Importers must also be aware of their rights under the TCO, including the ability to apply for duty refunds on goods imported since the effective date of the TCO, as per Regulation 126(1)(r). The TCO does not retroactively impose any liabilities on importers or other parties, maintaining the status quo for rights and obligations existing prior to the TCO's enactment.
Failure to comply with the provisions of the TCO or the Customs Act may result in various consequences. Under the Act, breaches of the tariff concessions can lead to penalties, which may include fines or other sanctions as prescribed by the relevant legislation. The maximum penalties for such breaches can vary depending on the severity and intent behind the non-compliance. Importers who fail to adhere to the conditions of the TCO, such as inaccurately claiming tariff concessions for goods that do not meet the criteria, could face civil or criminal penalties as outlined in the Act. These penalties are intended to enforce compliance and uphold the integrity of the tariff concession scheme.