EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1026025
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.
Bunzl Outsourcing Services Ltd applied for a TCO in respect of certain incontinence pants on 10 June 2010.
Instrument
TCO No 1026025 was made on 22 November 2010. It declares that those certain incontinence pants 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. 1026025 is taken to have come into force on 10 June 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 Commonwealth Parliament, established a framework for managing the importation of goods into Australia. It introduced the concept of Tariff Concession Orders (TCOs) to provide relief from customs duties on specific goods. This was intended to address the problem of excessive duty on certain goods, particularly those where no domestic alternatives exist or could be reasonably produced. The Act allows for the application of a lower rate of customs duty on goods specified in a TCO. The Tariff Concession Instrument No. 1026025, made in 2011, exemplifies this mechanism by granting a duty concession on certain incontinence pants, reducing the duty rate from 5% to free, as no substitutable goods were produced in Australia. The policy objective is to provide relief to importers and consumers by reducing the cost of these essential goods.
Scope and Application
The Tariff Concession Instrument No. 1026025, made under the Customs Act 1901, applies to goods specified in the instrument, namely certain incontinence pants, and is intended to provide tariff concessions to these goods. The Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which lower the customs duty rate for specified goods, provided the application meets the core criteria. In this case, the CEO determined that no substitutable goods were produced in Australia in the ordinary course of business, thus satisfying the core criteria for the concession. The instrument applies to the goods specified and does not affect any person's rights or impose liabilities for actions taken before its registration. The geographic and jurisdictional reach of this Act is national, as it is a Commonwealth instrument, and it does not extend beyond the specified goods and the criteria outlined within the Customs Act 1901.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1026025 under the Customs Act 1901 (section 269C) establish the criteria for making a Tariff Concession Order (TCO). If the Chief Executive Officer (CEO) of Customs is satisfied that the application for a TCO meets the core criteria, they are required to make a written order (section 269P(3)). Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business.
The Act imposes several obligations and requirements on the parties involved. An applicant, such as Bunzl Outsourcing Services Ltd, must submit an application to the CEO for a TCO in respect of goods (section 269F). The CEO must then determine whether the application meets the core criteria (section 269C). If satisfied, the CEO must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thus granting tariff concessions (section 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions from any interested parties, although in this case, no submissions were received (subsection 269K(1)).
There are civil and criminal consequences for breach of the provisions in the Customs Act 1901. While the explanatory statement does not detail specific offences or penalties, it is understood that the Act provides for penalties for breaches related to the making of false statements or the misuse of tariff concessions. The maximum penalties for such offences can include substantial fines and, in some cases, imprisonment. The TCO itself does not impose any liabilities on any person and does not affect the rights of any person as at the date of registration in a way that would disadvantage them.