EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1014805
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.
Bunnings Group Ltd applied for a TCO in respect of certain garden protecting netting on 25 March 2010.
Instrument
TCO No 1014805 was made on 11 June 2010. It declares that those certain garden protecting netting 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. 1014805 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 Tariff Concession Instrument No. 1014805, enacted under the Customs Act 1901, addresses the gap in tariff concessions for specific goods not currently produced in Australia. This instrument was introduced to facilitate lower customs duties on these goods, thereby benefiting the import market. The instrument was developed in response to an application by Bunnings Group Ltd for tariff concessions on certain garden protecting netting, which was approved by the Chief Executive Officer of Customs upon finding that no substitutable goods were produced domestically. This tariff concession aims to improve access to these goods without disadvantaging existing rights or imposing new liabilities on any party. The process involves the CEO making a written order once it is determined that the application meets the core criteria, and the tariff concession order comes into force on the day the application is lodged.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs) under Part XVA, applies to goods that are subject to a lower rate of customs duty as determined by the Chief Executive Officer of Customs (CEO). The Act permits an individual or entity, such as Bunnings Group Ltd, to apply for a TCO if specific criteria are met, notably the absence of substitutable goods produced in Australia. The TCO mechanism is a national scheme, extending across all states and territories of Australia. However, it excludes goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The CEO's decision-making process involves ensuring that the application is valid and meets the core criteria before issuing a written order that specifies the reduced duty rate. This process is designed to benefit importers by allowing them to claim refunds on duties paid on goods imported since the TCO was taken to be in force, without imposing any liabilities on them for actions taken prior to the TCO's registration.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1014805, made under the Customs Act 1901, declare that certain garden protecting netting are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies (subsection 269P(3)). This declaration follows the determination by the Chief Executive Officer (CEO) of Customs that no substitutable goods were produced in Australia in the ordinary course of business, satisfying the core criteria set out in section 269C of the Act. The instrument specifies that the general rate of duty on these goods is 5%, but for the goods subject to the Tariff Concession Order (TCO), the rate of duty is free (section 269P(3)).
The obligations imposed by this TCO on the parties it governs include ensuring compliance with the terms of the order, which primarily concerns the application of a lower rate of customs duty to the specified goods. This obligation falls on the importers of the garden protecting netting, who must now apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). The CEO is also obliged to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)).
Breaches of the provisions outlined in the Tariff Concession Instrument No. 1014805 may lead to civil or criminal consequences, depending on the nature and severity of the breach. However, the explanatory statement does not specify particular offences or penalties. Under the Customs Act 1901, penalties for breaches can include fines and imprisonment, with the specific penalties depending on the nature and circumstances of the offence. The maximum penalties for customs-related offences can be found in the Crimes Act 1914, which provides for substantial fines and imprisonment terms for serious breaches.