EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0938934
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.
Nespresso Australia applied for a TCO in respect of certain cups on 15 October 2009.
Instrument
TCO No 0938934 was made on 30 December 2009. It declares that those certain cups 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. 0938934 is taken to have come into force on 15 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework under which Tariff Concession Orders (TCOs) may be issued to provide tariff relief on certain imported goods. The Tariff Concession Instrument No. 0938934, made in 2009, was introduced to address the specific needs of Nespresso Australia, which sought a tariff concession on certain cups used for their coffee machines. The problem it aimed to resolve was the potential economic disadvantage faced by the company due to the application of a higher customs duty on these specific imported goods. The CEO of Customs, satisfied that the application met the core criteria of the Act and that no substitutable goods were produced in Australia, issued the TCO, granting a zero rate of duty on the specified goods, which otherwise would have been subject to a 5% duty rate.
Scope and Application
The Tariff Concession Instrument No. 0938934, made under the Customs Act 1901, applies to the goods specified in the instrument, in this case certain cups for Nespresso Australia. The Act provides a framework for the Chief Executive Officer of Customs to grant tariff concessions on goods, reducing or eliminating customs duty for specific items when certain conditions are met. Specifically, this instrument applies to the particular cups used in Nespresso machines, granting them a free rate of duty as opposed to the general rate of 5%. The scope of the Act extends to any entity or individual seeking tariff concessions for goods not specified in section 269SJ of the Customs Act, which excludes certain goods from eligibility. The instrument is effective from the date the application was lodged, 15 October 2009, and does not affect any pre-existing rights or impose liabilities on any person other than the Commonwealth. The instrument's application can be further extended or specified through subordinate instruments, allowing for detailed regulation of the tariff concessions process.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0938934 are sections 269C, 269B, 269P, 269K, and 269S. Section 269C (3) sets out the core criteria for the Chief Executive Officer of Customs (CEO) to consider in deciding whether to grant a Tariff Concession Order (TCO). Section 269B defines key terms such as ‘goods produced in Australia,’ ‘ordinary course of business,’ and ‘substitutable goods.’ Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, a TCO must be made. Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties. Finally, section 269S(1) specifies that the TCO comes into force on the day the application is lodged.
The Act imposes several obligations on the CEO. The CEO must decide whether a TCO application meets the core criteria (section 269C). This requires assessing whether no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties, allowing them to object to the proposed TCO (section 269K). If the CEO decides to grant the TCO, they must make a written order declaring the goods to which the concession applies (section 269P(3)). Furthermore, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities on them for actions taken before the TCO's effective date (section 269S).
Failure to comply with the requirements of the Customs Act 1901 can result in various penalties and consequences. While the explanatory statement does not detail specific offences or penalties for breaches of the TCO, it is clear that the CEO must follow the statutory criteria and procedures for granting a TCO. Non-compliance could lead to legal challenges, as the Act ensures that the rights of third parties are not adversely affected by the TCO. In the case of Nespresso Australia, the CEO's decision to grant the TCO was made in accordance with the Act, and no objections were received, which suggests compliance with the legislative requirements. However, any future non-compliance by the CEO could potentially lead to legal consequences, including judicial review by affected parties.