EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1013301
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.
Getinge Australia applied for a TCO in respect of certain hospital washing and disinfecting system on 17 March 2010.
Instrument
TCO No 1013301 was made on 11 June 2010. It declares that those certain hospital washing and disinfecting system 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. 1013301 is taken to have come into force on 17 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, provides a framework for the regulation of imports and exports, including the imposition of customs duties. Part XVA of the Act facilitates the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can apply lower rates of customs duty on specific goods. The problem this legislation aims to address is the potential for Australian businesses to be at a competitive disadvantage if similar goods are produced domestically, thereby justifying the need for tariff concessions where no substitutable domestic goods exist. The explanatory statement for Tariff Concession Instrument No. 1013301, made under the Customs Act 1901, details the application and subsequent approval by the CEO of a TCO for certain hospital washing and disinfecting systems. This instrument, effective from 17 March 2010, effectively reduces the duty on these systems from the general rate of 5% to free, contingent upon the CEO’s determination that no substitutable goods are produced in Australia. The instrument’s commencement date aligns with the application date, ensuring that rights of importers are preserved without retroactive liabilities, while providing them with potential duty refunds.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO). This Act applies to individuals and entities seeking tariff concessions for goods, ensuring that such applications are evaluated against set criteria. The application process is triggered when a person applies to the CEO for a TCO concerning certain goods, provided these goods are not listed in section 269SJ as ineligible. For an application to meet the core criteria, it must be demonstrated that no substitutable goods are produced in Australia at the time of application, as defined by sections 269C, 269D, 269E, and 269F of the Act. Once the CEO determines that the criteria are met, a TCO is issued, effectively applying a reduced or free duty rate on the specified goods. This instrument extends nationally across Australia and does not disadvantage any person by retroactively affecting their rights or imposing liabilities for actions taken before the TCO's registration date. The CEO must also publish a notice in the Gazette inviting public submissions if any are received, although in the case of TCO No. 1013301, no submissions were made.
Key Provisions
The Customs Act 1901, as amended, includes provisions (sections 269C, 269B, 269D, 269E, 269F, 269P, and 269SJ) that enable the Chief Executive Officer (CEO) of Customs to grant Tariff Concession Orders (TCOs) for certain goods, reducing their customs duty rate. For a TCO to be considered, the CEO must ensure that the goods in question are not specified in section 269SJ, which lists goods ineligible for TCOs. Additionally, the application must meet the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was submitted. Section 269P(3) mandates that if the CEO is satisfied with the application, they must issue a written order (TCO) specifying that the goods are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995. The TCO, once issued, applies retroactively to the date of the application, as per section 269S(1), meaning that any importations of the specified goods since that date are eligible for duty concessions.
The obligations imposed by the Act on the CEO include accepting valid TCO applications, determining whether they meet the core criteria, and issuing written orders when appropriate. Furthermore, section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties who believe the TCO should not be granted. This ensures transparency and provides an opportunity for public input. In the case of TCO No. 1013301, which was issued on 11 June 2010 for certain hospital washing and disinfecting systems, the CEO did not receive any submissions in response to the Gazette notice.
In terms of penalties and consequences, the Act does not explicitly state penalties for non-compliance with the TCO provisions. However, the general legal framework under which the Customs Act operates includes potential civil and criminal penalties for breaches of customs regulations. For instance, knowingly making false statements or representations to the CEO can lead to criminal charges, with potential fines and imprisonment. Similarly, failure to comply with customs duties and other obligations could result in financial penalties, seizure of goods, or other enforcement actions by the Australian Border Force. Importers must ensure they adhere to the conditions and requirements of any TCO to avoid any adverse consequences.