EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0937562
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.
Mayvic Pty Ltd applied for a TCO in respect of certain polypropylene bags on 06 October 2009.
Instrument
TCO No 0937562 was made on 30 December 2009. It declares that those certain polypropylene bags 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. 0937562 is taken to have come into force on 06 October 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. 0937562, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions on specific goods, ensuring that Australian businesses can access materials at reduced customs duty rates if certain conditions are met. This instrument was made by the Chief Executive Officer of Customs (CEO) following an application by Mayvic Pty Ltd for tariff concessions on certain polypropylene bags, which was lodged on 6 October 2009. The policy objective is to provide tariff relief for goods where there are no substitutable products produced domestically, thereby supporting industry and trade efficiency. The instrument was published in the Gazette, inviting submissions, but none were received, and it came into effect on the date of the application, 6 October 2009. This tariff concession benefits importers by allowing them to apply for duty refunds for goods imported from the effective date, without imposing any liabilities on individuals or entities other than the Commonwealth.
Scope and Application
The Customs Act 1901, as modified by Tariff Concession Instrument No. 0937562, applies to the specific category of goods—certain polypropylene bags—for which Mayvic Pty Ltd applied for tariff concession. The Act permits the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) to reduce the customs duty on goods, provided that no substitutable goods are produced in Australia in the ordinary course of business. This particular TCO exempts the specified polypropylene bags from the usual 5% duty rate, instead applying a zero rate. The TCO applies nationally, aligning with the overarching provisions of the Customs Act 1901, and comes into force from the date the application was lodged. The application process involves public notification and consideration, although in this instance, no objections were raised. Notably, the TCO does not retroactively affect any rights or impose new liabilities on parties other than the Commonwealth, ensuring that the rights of importers are protected and can benefit from duty refunds on imports since the effective date of the TCO.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0937562 under the Customs Act 1901 (section 269F) and the Customs Tariff Act 1995 establish the framework for making Tariff Concession Orders (TCOs) (section 269P). A TCO can be applied for by any person who wishes to obtain a lower rate of customs duty on certain goods. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, a TCO can be made, resulting in the goods specified in the application being subject to a lower rate of customs duty. In this case, the CEO accepted the application from Mayvic Pty Ltd for certain polypropylene bags and declared that these goods are subject to item 50 of Schedule 4 to the Tariff, with the rate of duty being free, as opposed to the general rate of 5% (section 269P(3)). The TCO is taken to have come into force on the date the application was lodged, which was 06 October 2009 (subsection 269S(1)).
The Customs Act 1901 imposes several obligations and requirements on the parties involved in the TCO process. The CEO must decide whether an application for a TCO meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods specified in the application are subject to a TCO (section 269P(3)). The CEO must also publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made, and consider any submissions received (subsection 269K(1)). Mayvic Pty Ltd fulfilled their obligation by applying for the TCO, and the CEO fulfilled their obligations by deciding to grant the TCO and publishing the notice in the Gazette.
Breaching the requirements of the Customs Act 1901 can result in civil or criminal consequences. Under section 281 of the Customs Act 1901, any person who contravenes the Act, including making a false or misleading statement in an application for a TCO, is liable to a penalty of up to $22,200 for an individual or $111,000 for a body corporate, or imprisonment for up to two years, or both. The Act also provides for additional penalties for repeat or serious offences, with maximum penalties of up to $444,000 for an individual or $2,220,000 for a body corporate, or imprisonment for up to ten years, or both. These penalties are intended to deter non-compliance with the Act and ensure that the TCO process is carried out fairly and efficiently.