EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0943202
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.
Shiro Australia applied for a TCO in respect of certain barbecue covers on 16 November 2009.
Instrument
TCO No 0943202 was made on 29 January 2010. It declares that those certain barbecue covers 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. 0943202 is taken to have come into force on 16 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 Customs Act 1901, enacted by the Commonwealth Parliament, establishes a framework for the application and processing of Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain imported goods. This framework was introduced to address the need for streamlined and effective tariff adjustments that benefit specific industries without imposing undue burdens on the Australian economy. The explanatory statement for Tariff Concession Instrument No. 0943202, made in 2010, illustrates the application of this process, highlighting how a TCO can effectively reduce the customs duty on specified goods. Shiro Australia's application for a TCO in respect of certain barbecue covers was approved, with the CEO of Customs determining that no substitutable goods were produced in Australia, thereby satisfying the core criteria under the Act. This legislative mechanism ensures that the rights of importers are protected and that the concession does not impose liabilities on any person, thus achieving the policy objective of providing targeted tariff relief.
Scope and Application
The Customs Act 1901, through Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders provide for a lower rate of customs duty on specified goods. Applications for TCOs are governed by section 269F, where any person can apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which lists goods ineligible for TCOs. Section 269C stipulates that an application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business at the time of application. The terms "goods produced in Australia," "ordinary course of business," and "substitutable goods" are defined in sections 269D, 269E, and 269F respectively. If the CEO determines that the application meets these criteria, a TCO is issued under section 269P(3), applying a prescribed item of Schedule 4 to the Customs Tariff Act 1995 to the goods in question. The application process includes publishing a notice in the Gazette to allow for objections, though in the case of TCO No 0943202, no objections were received. This TCO, which came into force on 16 November 2009, grants a free rate of duty for certain barbecue covers, reducing the general duty rate of 7.5% to zero.
Key Provisions
The main operative sections of the Customs Act 1901, particularly section 269C, establish the criteria that must be satisfied for a Tariff Concession Order (TCO) to be issued. Specifically, section 269C states that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This means that the goods subject to the TCO must not have an Australian equivalent that can be used for the same purpose. The Chief Executive Officer of Customs (CEO) is required to make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 if satisfied that the application meets these criteria (section 269P(3)).
The Act imposes certain obligations on parties applying for a TCO. Firstly, applicants must ensure that the goods in question do not have Australian-produced equivalents that serve the same purpose (section 269C). They must also lodge their application in accordance with the prescribed procedures. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from interested parties, which they must consider before making a decision (subsection 269K(1)). Shiro Australia, for instance, applied for a TCO for certain barbecue covers on 16 November 2009, and the CEO issued TCO No. 0943202 on 29 January 2010 after satisfying these criteria.
Under the Customs Act 1901, breaches of the requirements for issuing TCOs or misapplying the concessions granted by a TCO can lead to civil and criminal penalties. While the explanatory statement does not detail specific offences or penalties for these breaches, the general legal framework in Australia provides for various sanctions. Civil penalties can include fines, restitution, or other remedies depending on the nature and severity of the breach. Criminal penalties can include fines and imprisonment, especially if the breach involves intentional misrepresentation or fraud. The maximum penalties would depend on the specific statutory provisions under which the offence is prosecuted.
In this case, the TCO No. 0943202 does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO's effective date. It only benefits importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations). The TCO does not affect the rights of any person other than the Commonwealth, ensuring that the rights of importers are beneficially affected while maintaining fairness in trade practices.