EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1030671
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.
Jaylon Industries Pty Ltd applied for a TCO in respect of certain planter bags on 06 July 2010.
Instrument
TCO No 1030671 was made on 29 September 2010. It declares that those certain planter bags 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. 1030671 is taken to have come into force on 06 July 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, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This legislation was introduced to address the need for concessional tariff rates for specific goods that are not produced domestically, thereby supporting economic efficiency and competitiveness. The explanatory statement for Tariff Concession Instrument No. 1030671, made under this Act, outlines the process and criteria for applying for and granting a TCO. In this instance, Jaylon Industries Pty Ltd successfully applied for a TCO for certain planter bags, resulting in a tariff concession from the standard 5% duty rate to a zero duty rate, effective from 6 July 2010. The objective is to facilitate the importation of goods that are not domestically produced, thus benefiting importers and potentially lowering costs for consumers.
Scope and Application
The Customs Act 1901 applies to individuals, businesses, and entities involved in the importation of goods into Australia. Specifically, the Act governs the application and issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These TCOs provide a lower rate of customs duty for certain goods that meet specific criteria, such as when no substitutable goods are produced in Australia. The Act extends to the entire Commonwealth of Australia and applies to any goods subject to the Customs Tariff Act 1995. However, certain goods specified in section 269SJ of the Customs Act are excluded from the TCO scheme. The Act also allows for the creation of TCOs through subordinate instruments, which further define the application and scope of the tariff concessions. The rights of importers are protected, ensuring they are not disadvantaged by the issuance of a TCO, and they may apply for a refund of duty on eligible goods.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 1030671 under the Customs Act 1901 (section 269F) establish the framework for the application and assessment of Tariff Concession Orders (TCOs). A TCO can be applied for by any person seeking a lower rate of customs duty for specific goods, provided they do not fall under the restricted categories outlined in section 269SJ. The Chief Executive Officer of Customs (CEO) must evaluate the application against core criteria, specifically whether substitutable goods are being produced in Australia (section 269C). If the application meets these criteria, the CEO must issue a written TCO (section 269P(3)), as demonstrated in this case with the planter bags, which now attract a duty rate of free instead of the general rate of 5%.
The Act imposes specific obligations on the CEO, including the duty to publish a notice in the Gazette upon accepting a valid TCO application and inviting submissions from interested parties (subsection 269K(1)). In this instance, the CEO did not receive any submissions, indicating no objections were raised regarding the TCO for the planter bags. Additionally, the TCO must be registered on the date the application was lodged (subsection 269S(1)), which for this TCO was 06 July 2010.
In terms of consequences for non-compliance, the Act does not specify particular offences or penalties for breaching the conditions of a TCO. However, any failure to adhere to the established criteria for issuing a TCO or any misuse of the concessions granted by a TCO could potentially lead to legal challenges or administrative actions. The rights of importers and others are protected such that the TCO does not disadvantage any person or impose liabilities for actions taken prior to the TCO's effective date (subsection 269S(1)). Importers are, however, entitled to apply for duty refunds on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations).