EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1000790
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.
Mayvic Pty Ltd applied for a TCO in respect of certain polyethylene bags on 06 January 2010.
Instrument
TCO No 1000790 was made on 22 March 2010. It declares that those certain polyethylene bags 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. 1000790 is taken to have come into force on 06 January 2010.
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, establishes a framework for the imposition of customs duties on imported goods. The Act, through its Part XVA, provides for the creation of Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on specified goods. The enactment of this legislation aimed to address the need for flexibility in the imposition of customs duties to encourage trade and protect Australian industries where necessary. The Explanatory Statement for Tariff Concession Instrument No. 1000790, made under this Act on 22 March 2010, outlines the process by which Mayvic Pty Ltd successfully applied for a TCO for certain polyethylene bags. The CEO of Customs was satisfied that no substitutable goods were produced in Australia, thus meeting the core criteria for the concession. The policy objective, as reflected in the Act, is to provide a streamlined process for tariff concessions that benefit importers while ensuring that the rights of other stakeholders are not adversely affected.
Scope and Application
The Tariff Concession Instrument No. 1000790 under the Customs Act 1901 applies to the specific case of certain polyethylene bags, which are now subject to a reduced customs duty rate as a result of a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs (CEO). This legislation is applicable to the entity that applied for the concession, in this instance Mayvic Pty Ltd, and to the goods specified in the TCO, which in this case are certain polyethylene bags. The instrument is part of a national scheme under which the CEO can issue TCOs for goods that meet certain criteria, namely, that no substitutable goods were produced in Australia on the day the application was lodged. The geographic reach of this legislation is national, as it pertains to the Customs Act 1901, which is a Commonwealth Act. The exclusions include goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application of the Act may be extended or restricted through subordinate instruments, such as regulations, which may provide further detail on the administration and enforcement of the tariff concessions.
Key Provisions
The Customs Act 1901, under Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (sections 269C and 269F). These orders permit a lower rate of customs duty on specified goods. A TCO application is assessed by the CEO to ensure it meets the core criteria, which includes verifying that no substitutable goods are produced in Australia at the time of application (section 269C). If the CEO is satisfied, they must issue a written order that specifies the goods covered by the TCO (subsection 269P(3)). For example, in TCO No. 1000790, the CEO applied a zero duty rate to certain polyethylene bags starting from the date of application, 6 January 2010, as no substitutable goods were being produced in Australia.
The Act imposes certain obligations on both the CEO and applicants for TCOs. The CEO must ensure that the application complies with the core criteria and, if valid, must issue a TCO (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties regarding the application (subsection 269K(1)). This ensures transparency and allows for public scrutiny of the concession. Mayvic Pty Ltd, the applicant in this case, must provide sufficient evidence to support their claim that no substitutable goods are produced in Australia. The CEO, in turn, must act on the application promptly and fairly.
Breaching the conditions of a TCO or making a false application can lead to significant consequences. While the explanatory statement does not detail specific offences related to TCOs, the Customs Act 1901 generally provides for penalties for non-compliance. These can include fines and imprisonment for individuals, and fines for corporations. The severity of the penalties can vary based on the nature and extent of the breach. Importers, however, can benefit from the TCO by applying for a refund of duty paid on goods imported since the TCO came into effect (paragraph 126(1)(r) of the Regulations). The TCO itself does not impose any liabilities on any person other than the Commonwealth.