EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0944771
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 plastic caster cups on 25 November 2009.
Instrument
TCO No 0944771 was made on 29 January 2010. It declares that those certain plastic caster 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. 0944771 is taken to have come into force on 25 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. 0944771, enacted in 2010 under the Customs Act 1901, was introduced to address the gap in tariff concession applications for goods not produced in Australia. This instrument facilitates tariff concessions by allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) for certain goods, thereby lowering the rate of customs duty on them. The Customs Act 1901 establishes the criteria for TCO applications, ensuring that the goods in question are not substitutable by Australian-produced goods and that the application meets core criteria as specified in the Act. McPhersons Consumer Products' application for a TCO in respect of certain plastic caster cups was approved on 29 January 2010, resulting in a duty rate reduction from 5% to free. The policy objective of this instrument is to support Australian importers by reducing customs duty on goods not produced domestically, thus benefiting their rights and potentially allowing for duty refunds on imports since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the scheme for Tariff Concession Orders (TCOs) which are issued by the Chief Executive Officer of Customs. These orders apply a lower rate of customs duty on certain goods, provided they meet the core criteria set out in the Act. A TCO can be applied for by any person in relation to goods that are not specified as ineligible under section 269SJ of the Act. The application process involves a determination by the CEO that no substitutable goods are being produced in Australia in the ordinary course of business, as outlined in sections 269C and 269D. The scope of this legislation extends nationally, applying to any entity or individual involved in the importation of goods that qualify for a TCO. The geographic reach is across Australia, as it is a Commonwealth Act. The Act does not explicitly provide for exclusions or exemptions, but it does allow for subordinate instruments to further define terms and extend or restrict application where necessary. The instrument in question, TCO No. 0944771, pertains to certain plastic caster cups and was issued on 29 January 2010, effective from 25 November 2009. This particular TCO sets the duty on these goods to free, reducing the general rate of 5% applicable under the Customs Tariff Act 1995.
Key Provisions
The Tariff Concession Instrument No. 0944771, under the Customs Act 1901, provides a lower customs duty rate for certain plastic caster cups, as of 25 November 2009, when the application was lodged (section 269S(1)). This tariff concession order (TCO) applies because no substitutable goods were produced in Australia in the ordinary course of business on the date of the application (section 269C). The instrument, made on 29 January 2010, declares that the goods in question are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free rate for these goods, as opposed to the general rate of 5% (section 269P(3)).
Entities governed by this legislation, particularly those who may apply for a TCO, must ensure their applications meet the core criteria specified in the Customs Act 1901. This includes verifying that no substitutable goods were produced in Australia in the ordinary course of business on the application date (section 269C). Furthermore, applicants must adhere to the procedural requirements, such as lodging the application with the Chief Executive Officer of Customs (CEO) and providing any necessary documentation to substantiate the application (section 269F). Additionally, the CEO is mandated to publish a notice in the Gazette, inviting submissions from any interested parties who may oppose the TCO (subsection 269K(1)).
Breaching the requirements set forth in the Customs Act 1901 can lead to various consequences. If an entity fails to correctly apply for a TCO or provides misleading information, it may face civil or criminal penalties as outlined in the Act. For instance, knowingly making a false statement in an application could result in a fine or imprisonment (section 269Z). Furthermore, any misuse of a TCO, such as applying it to goods that do not meet the specified criteria, could also result in legal consequences.
The penalties for breaches can be significant. For example, under section 269Z of the Customs Act 1901, an individual may be subject to a fine of up to 10,000 penalty units or imprisonment for up to five years, or both, for knowingly making a false statement in connection with an application for a TCO. Similarly, any entity found to be in breach of the Act’s provisions regarding the proper application and use of TCOs could face substantial fines or other legal repercussions as determined by the court.
It is essential for parties involved to fully understand and comply with the requirements and obligations outlined in the Customs Act 1901 to avoid potential penalties and legal issues. By ensuring all applications for TCOs are accurate and correctly submitted, entities can benefit from the tariff concessions while avoiding the adverse consequences of non-compliance.