EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0941419
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.
Simes Australia Pty Ltd applied for a TCO in respect of certain baby feeding bottles on 4 November 2009.
Instrument
TCO No 0941419 was made on 29 January 2010. It declares that those certain baby feeding bottles 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. 0941419 is taken to have come into force on 4 November 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. 0941419, issued under the Customs Act 1901, was enacted in 2010 to address the problem of ensuring that certain goods which are not produced in Australia can benefit from tariff concessions, thereby encouraging importation and potentially reducing costs for consumers. The instrument was created to provide a streamlined process for granting tariff concessions on specific goods, allowing for a reduced rate of customs duty where appropriate. This was achieved through the application of the core criteria set out in the Act, which ensures that only those goods for which no substitutable Australian-produced alternatives exist can qualify for such concessions. The instrument was made by the Chief Executive Officer of Customs, following a successful application by Simes Australia Pty Ltd for tariff concessions on certain baby feeding bottles, which were determined not to have substitutable Australian-made counterparts. The tariff rate for these goods was set at zero, effectively providing a duty-free status for these imported items.
Scope and Application
The Customs Act 1901 provides a framework for the regulation of customs duty in Australia, and specifically, it allows for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods for which an application has been made and approved, under certain criteria, and provide for a lower rate of customs duty than the general rate. The Act applies to any person or entity that imports goods into Australia, and the application of the Act is national in scope, with the Commonwealth having jurisdiction over customs duties. The Act excludes certain goods from being subject to a TCO, as specified in section 269SJ, and the CEO must ensure that an application is not in respect of these excluded goods before proceeding. The Explanatory Statement for Tariff Concession Instrument No. 0941419, which was made on 29 January 2010, demonstrates the application of the Act by detailing the process through which Simes Australia Pty Ltd successfully applied for a TCO for certain baby feeding bottles, resulting in a reduction of the customs duty rate from 5% to free. The Act can extend or restrict its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the rates of duty applied to goods.
Key Provisions
The main sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) are sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods, provided those goods are not listed in section 269SJ, which excludes certain goods from TCO eligibility. Section 269C stipulates that a TCO application meets the core criteria if no substitutable goods are produced in Australia on the date of the application. Sections 269B and 269D define 'goods produced in Australia' and 'ordinary course of business', while section 269E defines 'substitutable goods'. If the CEO is satisfied that the application meets the core criteria, they must make a written order (TCO) under section 269P(3), declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved. An applicant must ensure their TCO application is not in respect of goods specified in section 269SJ and must provide sufficient information for the CEO to determine if the core criteria are met. The CEO is obligated to decide whether the application meets the core criteria and, if so, to make a written TCO. The CEO must also publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting any interested parties to submit reasons why the TCO should not be made. Failure to comply with these obligations may result in the application not being processed or the TCO not being granted.
Breach of the requirements set out in the Customs Act 1901 can lead to various consequences. While the explanatory statement does not detail specific penalties for non-compliance, breaches of customs legislation generally can result in civil and criminal penalties. Civil penalties may include fines, while criminal penalties could involve imprisonment, depending on the severity of the breach. The maximum penalties for customs-related offences can vary, but they can include substantial fines and imprisonment terms for serious or repeated offences. The precise penalties would depend on the specific breach and the circumstances of the case.