EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1019457
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 household tools on 29 April 2010.
Instrument
TCO No 1019457 was made on 19 July 2010. It declares that those certain household tools 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. 1019457 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 Tariff Concession Instrument No. 1019457 was enacted in 2010 under the Customs Act 1901, to address the need for tariff concessions for specific goods that are not produced in Australia and for which there are no substitutable goods available domestically. This instrument facilitates the application process for tariff concessions by allowing the Chief Executive Officer of Customs to grant reduced customs duties on imported goods, provided that no equivalent products are produced locally and that the application complies with the core criteria outlined in the Act. The objective of this legislative measure is to support Australian consumers by making certain imported goods more affordable, thus benefiting importers who can claim duty refunds for goods imported since the effective date of the concession.
The instrument was introduced by the Parliament of Australia, aiming to streamline the process for obtaining tariff concessions while ensuring that the rights of importers are protected and that no additional liabilities are imposed on individuals or entities other than the Commonwealth. Following the application by McPherson's Consumer Products for tariff concessions on certain household tools, the CEO determined that no substitutable goods were produced in Australia, thus satisfying the core criteria. Consequently, the instrument was made, declaring that these tools would be subject to a free rate of duty, effective from the date of the application.
Scope and Application
The Tariff Concession Instrument No. 1019457, made under Part XVA of the Customs Act 1901, applies to goods specified in the instrument, namely certain household tools, which are subject to a Tariff Concession Order (TCO). The instrument was initiated by an application from McPherson's Consumer Products on 29 April 2010, and it came into effect on the same date. The primary purpose of this instrument is to allow the Chief Executive Officer of Customs to impose a lower rate of customs duty on these goods, effectively making them duty-free. The Act mandates that no substitutable goods must be produced in Australia in the ordinary course of business for the TCO to be valid, which was confirmed by the CEO in this case. The application of this TCO does not affect the rights of any person except the Commonwealth and does not impose any liabilities on individuals or entities other than the Commonwealth. The TCO also includes provisions for importers to apply for a refund of duties paid on these goods since the date the TCO came into effect. The instrument's application is national in scope, adhering to the provisions of the Customs Act 1901, and its effects are further defined by the Customs Tariff Act 1995.
Key Provisions
The Customs Act 1901 (the Act) under which Tariff Concession Orders (TCOs) are made, provides that the Chief Executive Officer of Customs (the CEO) can issue these orders if certain conditions are met (s 269C). If an application is made and the CEO determines that it meets the core criteria, they are required to make a TCO (s 269F). For a TCO application to meet the core criteria, the CEO must be satisfied that no substitutable goods were produced in Australia on the day the application was lodged (s 269C). In this context, 'substitutable goods' are defined as goods produced in Australia that can be used in the same way as the goods for which the TCO is sought (s 269D, s 269E). If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a specific item in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)).
Under this legislation, McPherson's Consumer Products applied for a TCO for certain household tools on 29 April 2010, and TCO No. 1019457 was issued on 19 July 2010. This TCO declares that the specified household tools are subject to item 50 of Schedule 4 to the Tariff, since the CEO was satisfied that no substitutable goods were produced in Australia. The general duty rate on these goods is 5%, but the rate for goods subject to this TCO is free. The TCO was published in the Gazette with an invitation for submissions, but none were received (s 269K(1)). The TCO is taken to have come into force on 29 April 2010, the day the application was lodged (s 269S(1)). Importantly, the TCO does not affect the rights of persons (other than the Commonwealth) as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken prior to the registration date. Importers, however, will benefit from this TCO by being able to apply for a refund of duty on goods imported since the date the TCO came into force (reg 126(1)(r)).
The Act imposes several obligations on the parties involved. The CEO has the obligation to process TCO applications and determine whether they meet the core criteria. This includes verifying that no substitutable goods were produced in Australia on the application date. McPherson's Consumer Products, as the applicant, must ensure that their application provides all necessary information to satisfy the CEO that the goods in question meet the criteria for a TCO. The CEO must also publish a notice in the Gazette inviting submissions on the TCO application, ensuring transparency and giving interested parties an opportunity to voice any objections or concerns. Once a TCO is issued, importers of the specified goods can apply for a refund of duty paid on those goods since the TCO's effective date.
Breaching the requirements set out in the Customs Act 1901 can result in various civil and criminal consequences. For instance, providing false information in a TCO application can be considered a fraudulent act, potentially leading to criminal charges. Penalties for fraud under the Customs Act can include substantial fines and imprisonment. Additionally, if a party fails to comply with the terms of a TCO or engages in any activities that circumvent the intended benefits of the concession, they may face legal action. The maximum penalties for such breaches can vary but often include fines that can be significant, reflecting the seriousness of contravening customs regulations. The Act also provides for the imposition of administrative penalties for non-compliance, which can further deter breaches of the legislation.