EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051155
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 heat resistant polyester oven bags on 18 November 2010.
Instrument
TCO No 1051155 was made on 07 February 2011. It declares that those certain heat resistant polyester oven 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. 1051155 is taken to have come into force on 18 November 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 was enacted to provide for the administration of customs and excise and includes provisions for the imposition of duties and the application of tariff concession orders (TCOs). TCOs are designed to provide tariff relief on certain goods, which helps to alleviate the financial burden on businesses and consumers by reducing the duty payable on imported goods that are not produced domestically. The Explanatory Statement for Tariff Concession Instrument No. 1051155 indicates that this instrument was introduced to address the specific need for tariff concessions on certain heat resistant polyester oven bags. This was achieved by declaring these goods to be subject to a reduced duty rate, thereby promoting fair competition and supporting the importation of goods that are not locally produced. The instrument was enacted by the Chief Executive Officer of Customs following an application by McPherson's Consumer Products and was published in the Gazette, with no objections received from interested parties.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs (CEO) may grant a lower rate of customs duty on certain goods. An application for a TCO can be submitted by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists those goods that are ineligible for TCOs. The CEO determines whether an application meets the core criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business on the date the application was lodged. If these criteria are met, a TCO is issued, applying a prescribed rate from Schedule 4 to the Customs Tariff Act 1995. For instance, McPherson's Consumer Products successfully applied for a TCO on certain heat-resistant polyester oven bags, resulting in a zero duty rate on these goods. The TCO process requires the CEO to publish a notice in the Gazette inviting objections, although in this case, no submissions were received. The TCO is effective from the date the application was lodged, benefiting importers by potentially entitling them to a refund of duty for goods imported since that date, without imposing any liabilities on any person.
Key Provisions
The Customs Act 1901, through its Part XVA, establishes a framework whereby Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (section 269F). An application for a TCO can be submitted to the CEO for goods not listed in section 269SJ, which details goods ineligible for such concessions. To qualify, the application must meet the core criteria set out in section 269C, which necessitates that, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. Upon determining that an application meets these criteria, the CEO must issue a written TCO, as per section 269P(3), specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods.
The obligations imposed by the Act on the CEO include assessing the validity of TCO applications against the core criteria and issuing orders where appropriate. The CEO must also publish a notice in the Gazette, inviting submissions from any interested parties who might oppose the issuance of a TCO (subsection 269K(1)). This process was followed in the case of McPherson's Consumer Products, which applied for a TCO for certain heat-resistant polyester oven bags on 18 November 2010. As no submissions were received in opposition, the CEO issued TCO No 1051155 on 7 February 2011, declaring that these oven bags are subject to the free duty rate under item 50 of Schedule 4 to the Tariff.
Breach of the requirements set out in the Customs Act 1901, particularly in relation to the submission of false information in an application for a TCO, may result in civil or criminal consequences. Under Australian law, providing false or misleading information can lead to penalties, including fines and imprisonment, depending on the severity of the offence. The maximum penalties for such offences are detailed in other sections of the Act and related legislation, but they generally include substantial financial penalties and potential imprisonment for individuals responsible for the breach. Companies may also face fines and other civil penalties for non-compliance.