EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1010826
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.
Tea Too Propietary Limited applied for a TCO in respect of certain teapots on 02 March 2010.
Instrument
TCO No 1010826 was made on 14 May 2010. It declares that those certain teapots 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. 1010826 is taken to have come into force on 02 March 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, introduced a framework within which Tariff Concession Orders (TCOs) could be issued by the Chief Executive Officer of Customs (CEO). This legislative instrument was designed to address the need for a mechanism that allows for the reduction of customs duty on specific goods, provided certain conditions are met. The Act allows for a TCO to be issued if no substitutable goods are produced in Australia and the application meets the core criteria set out in the legislation. The objective is to facilitate trade by reducing the duty on goods that are not domestically produced in a substitutable form, thereby encouraging importation and potentially lowering costs for consumers and businesses alike.
Tariff Concession Instrument No. 1010826, made under the Customs Act 1901, was introduced to provide a concession on customs duty for certain teapots imported by Tea Too Proprietary Limited. The CEO of Customs determined that no substitutable goods were produced in Australia for these teapots, satisfying the core criteria for a TCO. Consequently, the CEO issued Instrument TCO No. 1010826, which effectively reduced the duty on these teapots from a general rate of 5% to free. This instrument was published in the Gazette with an invitation for public submissions, none of which were received. The TCO came into force on the date the application was lodged, 02 March 2010, and it does not affect any pre-existing rights or impose new liabilities on any person other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 1010826, which is part of the Customs Act 1901, applies to the specific goods, in this case teapots, that are the subject of a Tariff Concession Order (TCO) application. The Act provides a framework for the Chief Executive Officer of Customs to consider applications for TCOs which aim to reduce the rate of customs duty on certain imported goods. This concession is applicable if the goods in question are not specified in section 269SJ of the Act and meet the core criteria outlined in sections 269C, 269D, 269E, and 269P. Specifically, the Act requires that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The TCO is applicable nationally as it falls under Commonwealth jurisdiction. Notably, the TCO does not affect any pre-existing rights or impose any new liabilities on individuals or entities other than the Commonwealth, and it does not disadvantage any person except the Commonwealth. This particular TCO, number 1010826, was applied to certain teapots and took effect from 2 March 2010, the date the application was lodged.
Key Provisions
The primary sections of this legislation, under the Customs Act 1901, relate to Tariff Concession Orders (TCOs) and their application process, as outlined in sections 269F, 269C, and 269P(3). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. If the application meets the core criteria specified in section 269C, which involves ensuring that no substitutable goods are produced in Australia, the CEO must make a written order declaring that the goods in question are subject to a prescribed tariff item. The TCO specifies the reduced rate of customs duty applicable to the goods, which in the case of the teapots in question, is zero.
The Act imposes several obligations and requirements on the parties involved. Firstly, any person wishing to apply for a TCO must ensure their application is valid and meets the core criteria (section 269C). The CEO of Customs has the responsibility to review the application, determine if it meets the criteria, and, if satisfied, make the appropriate order (sections 269F and 269P(3)). Additionally, upon accepting a valid TCO application, the CEO must publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not be made (subsection 269K(1)). This transparency step ensures that the process is open to public scrutiny and input.
Failure to comply with the provisions of the Act may result in various consequences. For example, if an individual or entity submits an application for a TCO that does not meet the core criteria, the CEO is not obligated to make the order, and the applicant may face the standard duty rates on their goods. There are no explicit civil or criminal penalties outlined for failing to meet the core criteria, but the primary consequence would be the inability to secure the tariff concession. However, if there is an abuse of the TCO process, such as providing false information in an application, this could lead to additional scrutiny, penalties, or even legal action under other relevant legislation.