EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1019451
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 eyelash adhesives on 29 April 2010.
Instrument
TCO No 1019451 was made on 19 July 2010. It declares that those certain eyelash adhesives 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. 1019451 is taken to have come into force on 29 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, introduces a scheme allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which apply lower rates of customs duty to specified goods. This scheme was established to provide relief for certain goods by lowering the duty, thereby making them more affordable and competitive in the domestic market. The Act was designed to address the gap in providing tariff relief where no substitutable goods were produced in Australia. McPherson's Consumer Products applied for a TCO for certain eyelash adhesives, which was granted on 19 July 2010, effective from 29 April 2010, when the application was lodged. The policy objective is to facilitate trade by reducing the duty burden on certain imported goods, thereby encouraging their use and availability in the Australian market.
Scope and Application
The Tariff Concession Instrument No. 1019451 under the Customs Act 1901 applies specifically to goods that are the subject of a Tariff Concession Order (TCO). This legislation governs the process by which a person, such as McPherson's Consumer Products in this instance, can apply for a TCO to receive a lower rate of customs duty on certain goods. The application process involves the Chief Executive Officer of Customs, who assesses whether the goods in question meet the core criteria, primarily that no substitutable goods are produced in Australia in the ordinary course of business. The TCO applies to the specific goods—in this case, certain eyelash adhesives—and reduces the duty from the general rate of 5% to free, as outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995. The instrument does not extend to goods specified in section 269SJ of the Customs Act 1901, which are ineligible for TCOs. The geographic reach of this Act is national, and its application is not restricted by state or territory boundaries. Any person considering that there are reasons why the TCO should not be made can lodge a submission with the CEO, although in this case, no submissions were received. The TCO is taken to have come into force on the day the application was lodged, in this instance, 29 April 2010. The legislation ensures that the rights of any person other than the Commonwealth are not adversely affected by the TCO, and it does not impose any liabilities on any person.
Key Provisions
The Customs Act 1901, particularly under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) through the Chief Executive Officer (CEO) of Customs, who can impose lower rates of customs duty on specific goods. Section 269F allows an individual to apply to the CEO for a TCO concerning particular goods. If the CEO determines that the application does not pertain to goods excluded under section 269SJ, they must then evaluate whether the application meets the core criteria outlined in section 269C. A TCO application meets these criteria if, on the date of submission, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. Furthermore, if the CEO is satisfied that the application meets these criteria, they must issue a written order, a TCO, specifying that the goods in question fall under a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on parties include ensuring that any TCO applications meet the criteria set out in the legislation. Specifically, applicants must demonstrate that no substitutable goods are produced in Australia at the time of application, which involves a rigorous assessment of local production capabilities and the potential substitution of goods. Additionally, the CEO has an obligation to publish a notice in the Gazette inviting submissions from any person who might have reasons to oppose the TCO. The CEO must also consider any submissions received and make a reasoned decision based on the evidence provided.
Failure to comply with the requirements of the Customs Act 1901 or the terms of a TCO can lead to significant consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally attract civil or criminal penalties under the Customs Act. For instance, providing false or misleading information in an application can lead to fines or imprisonment. Additionally, any misuse of a TCO, such as attempting to import goods that do not genuinely qualify for the concession, can result in the imposition of the standard duty rates and potential legal action against the offender.