EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014413
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.
McPherson's Consumer Products applied for a TCO in respect of certain brush and mirror sets on 24 March 2010.
Instrument
TCO No 1014413 was made on 18 June 2010. It declares that those certain brush and mirror sets 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. 1014413 is taken to have come into force on 24 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 Parliament of Australia, establishes a framework for the regulation of customs duties in Australia. This legislation aims to streamline the process of applying for tariff concessions on imported goods, which can alleviate financial burdens on businesses and consumers. Specifically, it addresses the gap by providing a mechanism for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which can reduce or eliminate customs duties on certain goods, provided they meet specific criteria such as the absence of substitutable goods produced in Australia. The policy objective is to promote fair trade practices by ensuring that imported goods are not unfairly disadvantaged compared to locally produced alternatives. Tariff Concession Instrument No. 1014413, made under this Act, exemplifies this process by granting a tariff concession on specific brush and mirror sets, thereby reducing the duty on these goods from 5% to free.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to provide lower rates of customs duty on specified goods. A TCO applies to goods that are subject to the order, provided the application for the concession does not relate to goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. To meet the core criteria for a TCO, as outlined in section 269C, it must be established that no substitutable goods are produced in Australia in the ordinary course of business on the date the application is lodged. This determination is made under the definitions provided in sections 269D and 269E of the Act, which clarify the meaning of "goods produced in Australia" and "ordinary course of business," respectively. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia, and it extends to any goods imported into Australia that are eligible for a tariff concession. The application of the Act is further extended through subordinate instruments, which may specify additional conditions or details regarding the implementation and enforcement of the TCOs. Notably, the Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person in relation to actions taken before the registration of a TCO.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1014413, under the Customs Act 1901, pertain to the establishment and operation of Tariff Concession Orders (TCOs) for specified goods (sections 269C, 269F, 269P). Section 269F allows an individual to apply to the Chief Executive Officer of Customs (CEO) for a TCO for particular goods, provided these goods are not those specified in section 269SJ, which cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, such as the absence of substitutable goods produced in Australia on the day the application was lodged (section 269C), they must issue a written TCO. This TCO specifies the goods and the relevant item in Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)). For McPherson's Consumer Products, this resulted in certain brush and mirror sets being subject to a 5% duty rate, reduced to free under the TCO (item 50 of Schedule 4).
The Act imposes several obligations and requirements on the parties involved. The CEO must ensure that any TCO application is valid and meets the core criteria, which includes verifying that no substitutable goods were produced in Australia on the application date. Additionally, upon accepting a TCO application as valid, the CEO must promptly publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In the case of TCO No. 1014413, no submissions were received in response to this invitation. The TCO also ensures that the rights of non-Commonwealth persons are not adversely affected by its implementation, and it does not impose any new liabilities on individuals or entities.
Breaches of the provisions under the Customs Act 1901 can result in both civil and criminal penalties. Civil penalties may include fines, while criminal penalties can include imprisonment. The exact penalties depend on the specific breach and the severity of the violation. For example, knowingly making a false statement in an application for a TCO could lead to fines or imprisonment under section 271 of the Act. The maximum penalties for customs-related offences can be significant, reflecting the importance of compliance with the Act and its associated regulations.
In summary, Tariff Concession Instrument No. 1014413 allows for tariff concessions on specific goods under the Customs Act 1901, provided certain criteria are met. It places obligations on the CEO to validate applications and publish notices for public submissions. Failure to comply with the Act’s provisions can result in civil or criminal penalties, reinforcing the importance of adherence to the legislative requirements.