EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0944273
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 basting brushes on 23 November 2009.
Instrument
TCO No 0944273 was made on 25 January 2010. It declares that those certain basting brushes 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. 0944273 is taken to have come into force on 23 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 Australian Parliament, includes a scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This scheme allows for the application of a lower rate of customs duty on specified goods, provided certain criteria are met. The problem or gap this Act was introduced to address includes the need for a mechanism to reduce customs duty on specific goods where no suitable substitute is produced domestically, thereby promoting competitive market access and reducing costs for consumers. TCO No. 0944273, issued on 25 January 2010, exemplifies this process by granting a tariff concession on certain basting brushes, reducing the duty rate from 5% to free, contingent on the CEO’s determination that no substitutable goods were produced in Australia. The instrument aims to enhance market access and benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into effect on 23 November 2009, without imposing any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0944273, issued under the Customs Act 1901, applies to the specific category of goods identified in the instrument, which in this case are certain basting brushes. The Act allows for the Chief Executive Officer of Customs to grant tariff concession orders (TCOs) that provide lower rates of customs duty on goods that meet certain criteria, such as the absence of substitutable goods produced in Australia. The application of this particular TCO was made by McPhersons Consumer Products, and it was granted after the CEO determined that no substitutable goods were produced in Australia at the time of the application, satisfying the core criteria outlined in the Act. The TCO provides a benefit by reducing the duty on these particular goods from a general rate of 5% to free, effective from the date the application was lodged, 23 November 2009. This legislation operates at the national level, governed by the Commonwealth, and its application is not restricted by geographic boundaries within Australia. The instrument itself does not impose any liabilities on individuals or entities other than the Commonwealth and does not affect any pre-existing rights of persons other than the Commonwealth.
Key Provisions
The main operative sections of the legislation pertain to the making of Tariff Concession Orders (TCOs) under the Customs Act 1901 (the Act). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. If the CEO is satisfied that the application is valid and the goods are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO, the CEO must determine whether the application meets the core criteria (section 269C). Specifically, the application must be made on a day when no substitutable goods are produced in Australia in the ordinary course of business (section 269C). If the CEO is satisfied that the application meets these criteria, they must make a written order (a TCO) that declares the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)).
The obligations and requirements imposed by the Act on the parties and entities it governs include the need for a valid application to be made by a person to the CEO for a TCO. The CEO must then determine if the application meets the core criteria, which involve ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Additionally, under subsection 269K(1) of the Act, the CEO must publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. If the CEO decides to proceed with making a TCO, they must do so in writing and specify which item of Schedule 4 to the Customs Tariff Act 1995 applies to the goods.
Any breaches of the provisions of the Customs Act 1901, including the failure to comply with the requirements for making a valid TCO application or the CEO’s obligations to assess and publish notices, can lead to civil or criminal consequences. However, the explanatory statement does not specify the exact nature of these consequences or the penalties associated with them. The statement does clarify that a TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration, so as to disadvantage that person or impose liabilities on them in respect of anything done or omitted before the date of registration. This means that while the TCO may benefit importers by allowing them to apply for a refund of duty on goods imported since the TCO came into force, it does not impose any liabilities on any person.