EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014661
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 scrubbing brushes on 25 March 2010.
Instrument
TCO No 1014661 was made on 18 June 2010. It declares that those certain scrubbing brushes 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. 1014661 is taken to have come into force on 25 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, serves as the legislative framework governing customs duties and related procedures. One significant aspect of this Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allow the Chief Executive Officer of Customs to reduce or eliminate customs duties on specific goods, provided certain criteria are met. The introduction of this mechanism aimed to address the need for targeted tariff relief that could promote economic benefits, such as supporting local industries or facilitating the importation of non-substitutable goods. The explanatory statement for Tariff Concession Instrument No. 1014661, issued on 18 June 2010, outlines the process by which McPherson's Consumer Products successfully applied for a TCO for certain scrubbing brushes, resulting in a reduction of customs duty from 5% to free. This instance exemplifies the policy objective of providing tariff relief where appropriate, enhancing economic efficiency and supporting industry growth without imposing additional liabilities on individuals or entities.
Scope and Application
The Tariff Concession Instrument No. 1014661 under the Customs Act 1901 applies to goods specified in the instrument, namely certain scrubbing brushes, for which a Tariff Concession Order (TCO) has been granted by the Chief Executive Officer of Customs. This order effectively lowers the customs duty for these goods from 5% to free. The Act applies to any entity or person who imports these goods, thereby benefiting them by reducing their duty obligations. The scope of this legislation extends across the Commonwealth of Australia, and it is made in accordance with the provisions outlined in the Customs Act 1901 and the Customs Tariff Act 1995. There are specific exclusions stipulated in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The Act also provides for the possibility of subordinate instruments to further define and administer the application of TCOs. The TCO in question came into force on 25 March 2010, the date on which the application was lodged, and does not affect any pre-existing rights or liabilities incurred before this date.
Key Provisions
The primary operative sections of this legislation are sections 269C, 269F, and 269P of the Customs Act 1901, which together establish the framework for the creation of Tariff Concession Orders (TCOs). Section 269F allows for the application to the Chief Executive Officer of Customs (CEO) for a TCO, while section 269C sets out the criteria that the CEO must be satisfied with in order to approve such an application. If the application meets these criteria, section 269P mandates that the CEO must issue a written TCO, specifying that the goods in question are subject to a particular item of the Customs Tariff Act 1995. In the given example, McPherson's Consumer Products applied for and received a TCO for certain scrubbing brushes, which now benefit from a free duty rate under item 50 of Schedule 4 to the Tariff.
The Customs Act 1901 imposes several obligations on both the CEO and applicants for TCOs. For the CEO, this includes reviewing applications to determine if they meet the core criteria set out in section 269C, which involves verifying that no substitutable goods are produced in Australia. If the CEO determines that the application meets these criteria, they must then proceed to issue a TCO as per section 269P. For applicants, the primary obligation is to ensure that their application is made in accordance with section 269F and that it provides sufficient evidence to satisfy the CEO that the goods in question meet the specified conditions.
Breaching the provisions of the Customs Act 1901 can result in various penalties and consequences. Although the explanatory statement does not explicitly state the penalties for non-compliance, it is reasonable to infer that breaches could lead to civil or criminal penalties as outlined in other sections of the Customs Act 1901. Such penalties might include fines or imprisonment, depending on the nature and severity of the breach. Additionally, the CEO may revoke a TCO if it is found that the conditions for its issuance were not met, thereby potentially exposing the applicant to financial loss.
Furthermore, the Customs Act 1901 ensures that the rights of third parties are protected, particularly importers, who may apply for duty refunds on goods imported since the TCO was deemed to come into force. This is an important aspect of the legislation as it ensures that the rights of existing parties are not adversely affected by the creation of a TCO. Moreover, the act explicitly states that TCOs do not impose any liabilities on any person other than the Commonwealth, thereby safeguarding individuals and businesses from unforeseen financial burdens.
In summary, the Customs Act 1901 provides a structured process for the creation of Tariff Concession Orders, with specific obligations for both the CEO and applicants. While the explanatory statement does not detail the exact penalties for non-compliance, it is clear that any breaches could have significant legal consequences. However, the act also ensures that the rights of existing parties, particularly importers, are protected, thereby maintaining a fair and balanced approach to tariff concessions.