EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0944773
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 paper bag on 25 November 2009.
Instrument
TCO No 0944773 was made on 29 January 2010. It declares that those certain paper bag 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. 0944773 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. 0944773 was enacted in 2010 under the Customs Act 1901 to address a gap in tariff concessions for certain goods. The Act provides for the creation of Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on goods specified in the order, provided that the goods are not substitutable and are not produced in Australia. McPhersons Consumer Products applied for a TCO for specific paper bags, and the Chief Executive Officer of Customs (CEO) determined that no substitutable goods were produced in Australia, thus satisfying the core criteria for a TCO. The CEO subsequently issued Instrument TCO No. 0944773 on 29 January 2010, which declares that the specified paper bags are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, effectively granting them a free rate of duty instead of the general 5%. The TCO came into effect on 25 November 2009, the date the application was lodged, and no submissions were received in response to the CEO's invitation for objections.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which can reduce the rate of customs duty on specified goods. This process applies to any person who can demonstrate that the goods they are importing do not have a substitutable counterpart produced in Australia and that the application does not concern goods listed in section 269SJ, which are ineligible for tariff concessions. The CEO must evaluate applications against criteria such as the absence of substitutable goods produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, and 269E. If the CEO determines that the application meets the core criteria, they are obligated to issue a written order granting the tariff concession. This process was applied in the case of McPhersons Consumer Products, who successfully applied for a TCO for certain paper bags, resulting in a duty rate of free instead of the general rate of 5%. The TCO mechanism ensures that the rights of third parties are protected, as the order does not disadvantage any person or impose liabilities for actions taken prior to the order's registration. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties, although in this instance, no submissions were received.
Key Provisions
The primary operative sections of this legislation revolve around the process and criteria for making Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269C, 269F, 269K(1)). A TCO application must be lodged with the Chief Executive Officer of Customs (CEO) if a party wishes to reduce the customs duty on specific goods. Section 269C specifies the core criteria an application must meet, primarily that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. If the CEO is satisfied that these criteria are met, they are required to make a written order, or TCO, specifying the goods and the applicable lower rate of duty (section 269P(3)).
The obligations imposed by this legislation are primarily on the CEO and the applicants for TCOs. The CEO must assess each TCO application to ensure it meets the core criteria specified in section 269C and make a written order if the criteria are met. Additionally, once an application is accepted as valid, the CEO must publish a notice in the Gazette inviting submissions from any interested parties (section 269K(1)). This notice serves as a public invitation for any person to provide submissions if they believe the TCO should not be granted. McPhersons Consumer Products, in this case, are required to ensure their application meets the specified criteria and provides any necessary information to substantiate their claim that no substitutable goods are produced in Australia.
Breaches of the provisions in this legislation can lead to significant civil and administrative consequences. If an application for a TCO is found to be misleading or incorrect, the CEO may refuse to grant the concession. Moreover, if the CEO makes a TCO without satisfying the core criteria, this could potentially lead to legal challenges or administrative reviews. While the specific penalties for such breaches are not explicitly detailed in the provided text, it is reasonable to infer that there could be substantial penalties for non-compliance, including the potential for the TCO to be revoked and the reimposition of higher duties on the affected goods. Such actions could also result in financial repercussions for the parties involved, including potential refunds of incorrectly paid lower duties.