EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1017213
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.
Ed Oates Pty Ltd applied for a TCO in respect of certain scrubbing brooms on 13 April 2010.
Instrument
TCO No 1017213 was made on 25 June 2010. It declares that those certain scrubbing brooms 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. 1017213 is taken to have come into force on 13 April 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, provides for the regulation of customs and excise duties, including the establishment of a scheme under which Tariff Concession Orders (TCOs) can be made. This scheme, detailed in Part XVA of the Act, was introduced to address the need for concessional tariff rates on specific goods, facilitating trade by reducing the duty payable on those goods. The problem it aims to solve is the potential economic disadvantage faced by businesses when importing goods that could be produced domestically. Under section 269F, a person may apply to the Chief Executive Officer of Customs for a TCO if the goods in question do not fall under the prohibitions outlined in section 269SJ, and if it is determined that no substitutable goods are produced in Australia. The policy objective is to ensure that such tariff concessions are granted judiciously, balancing trade facilitation with the protection of domestic industries. The Explanatory Statement for Tariff Concession Instrument No. 1017213, issued on 25 June 2010, exemplifies this process by granting a tariff concession on certain scrubbing brooms, thereby setting their duty rate at free, which was previously at 5%.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCO) for specified goods, which then apply a lower rate of customs duty. This instrument applies to entities or individuals who import goods that may qualify for a tariff concession, provided such goods are not specified in section 269SJ of the Act, which lists those that cannot be subject to a TCO. The Act applies on a national level as it is a Commonwealth legislation. The scope of the Act extends to ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged, as per section 269C. Once the application meets the core criteria, the CEO must make a written order specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question. The Explanatory Statement for Tariff Concession Instrument No. 1017213 provides an example where scrubbing brooms were subject to a TCO, reducing the duty from 5% to free. The TCO does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person.
Key Provisions
Section 269F of the Customs Act 1901 (the Act) allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO determines that the application pertains to goods that are not specified in section 269SJ of the Act, they must then decide if the application meets the core criteria set out in section 269C. A TCO application meets these criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269D of the Act respectively. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties or entities it governs include the requirement for the CEO to assess whether a TCO application meets the core criteria and to make a written order if the criteria are met. The CEO must also publish a notice in the Gazette as soon as practicable after accepting a TCO application as a valid application, inviting any person who believes the TCO should not be made to lodge a submission with the CEO. Additionally, the Act requires that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. In the case of Ed Oates Pty Ltd’s application for a TCO in respect of certain scrubbing brooms, the CEO made TCO No 1017213 on 25 June 2010, declaring that the goods were subject to item 50 of Schedule 4 to the Tariff.
Breach of the provisions in the Act may result in penalties and consequences. The maximum penalties for offences under the Act are not explicitly stated in the explanatory statement but generally, contraventions of the Customs Act 1901 can result in significant penalties, including fines and imprisonment, depending on the severity of the offence. Civil and criminal consequences may also arise if the provisions of the Act are not adhered to, potentially leading to financial penalties or legal action against the offending party. The explanatory statement does not detail specific penalties for non-compliance with the TCO provisions, but general penalties under the Act should be considered.