EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0939738
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.
McPhersons Consumer Products applied for a TCO in respect of certain luggage tags on 22 October 2009.
Instrument
TCO No 0939738 was made on 04 January 2010. It declares that those certain luggage tags 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. 0939738 is taken to have come into force on 22 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. 0939738, enacted under the Customs Act 1901, was introduced to provide tariff concessions for certain goods, thereby addressing the need for reduced customs duties on specific imported items to promote fair trade practices and economic efficiency. This instrument was established to facilitate the process of granting tariff concessions by the Chief Executive Officer of Customs, ensuring that such concessions are only applied to goods that do not have substitutable alternatives produced domestically. The Tariff Concession Order (TCO) No. 0939738, issued on 4 January 2010, was made in response to an application by McPhersons Consumer Products for certain luggage tags, reflecting the legislative intent to lower the customs duty on these goods to zero percent, down from the general rate of 5 percent. This legislative action was taken to benefit importers by potentially allowing them to claim refunds for duties paid on these goods since the TCO's effective date of 22 October 2009, without imposing any new liabilities or disadvantaging existing rights of non-Commonwealth persons.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to goods for which an application is made under section 269F, provided that the goods are not specified in section 269SJ, which lists goods ineligible for TCOs. The primary condition for a TCO, as outlined in section 269C, is that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. Definitions for key terms like 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods' are detailed in sections 269D, 269E, and 269F respectively. Once the core criteria are met, a TCO is issued under section 269P(3), altering the customs duty rate for the specified goods. The geographic reach of this Act is national, impacting all entities involved in the importation of the specified goods within Australia.
The application process mandates the CEO to publish a notice in the Gazette inviting objections to the TCO application, though no submissions were received in the case of TCO No. 0939738 concerning certain luggage tags. This TCO came into effect on the date of the application, 22 October 2009, without retroactively affecting rights or imposing new liabilities on persons other than the Commonwealth. Importers, however, can benefit from the TCO by applying for a refund of duty on goods imported since the effective date under paragraph 126(1)(r) of the Regulations. This legislative instrument thus provides a clear framework for the application and effect of tariff concessions on specific imported goods.
Key Provisions
The Customs Act 1901, under Part XVA, provides a mechanism for the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) which apply lower rates of customs duty to specified goods (s 269F). When McPhersons Consumer Products applied for a TCO for certain luggage tags on 22 October 2009, the CEO assessed whether the application met the core criteria, specifically whether no substitutable goods were produced in Australia on the day the application was lodged (s 269C). The definitions of key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269P(3) respectively. The CEO determined that the application met these criteria and issued TCO No. 0939738 on 4 January 2010, which specified that the luggage tags were subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a duty rate of free, instead of the general rate of 5%.
The obligations under the Customs Act for the parties involved include the requirement for applicants such as McPhersons Consumer Products to ensure their applications meet the core criteria specified in the Act. The CEO has the obligation to assess these applications against the criteria and make a written order if satisfied. Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the proposed TCO (s 269K(1)). In this case, no submissions were received in response to the notice, indicating that the CEO proceeded with the issuance of the TCO. The TCO is deemed to have come into force on the date the application was lodged (s 269S(1)), which in this instance was 22 October 2009.
The Act also specifies that the TCO does not affect the rights of any person, other than the Commonwealth, in a way that disadvantages them or imposes liabilities for actions taken before the TCO's registration (s 269S(1)). Importers stand to benefit from this TCO as they can apply for a refund of duty on goods imported since the TCO's effective date (Regulation 126(1)(r)). Any breach of the provisions related to TCOs could lead to civil or criminal consequences, although specific penalties are not detailed in this explanatory statement. However, it is clear that the Act is designed to ensure that the process for granting tariff concessions is transparent and that affected parties have an opportunity to be heard.