EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051157
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 self-sharpening knife sets on 18 November 2010.
Instrument
TCO No 1051157 was made on 07 February 2011. It declares that those certain self-sharpening knife sets 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. 1051157 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 a comprehensive framework for the regulation of customs and excise duties in Australia. This legislation was introduced to address the need for a structured approach to managing imported goods, ensuring revenue collection, and protecting domestic industries. The Parliament of Australia established this Act to streamline the customs process and to provide a legal basis for the imposition and collection of duties on imported goods. In particular, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs), which can be applied for by interested parties and are intended to provide relief from customs duties under specific conditions. The policy objective behind the TCO scheme is to facilitate the importation of goods that cannot be produced domestically, thereby promoting trade and benefiting consumers. The establishment of TCOs aims to address specific market gaps by ensuring that certain goods are accessible at reduced costs, which can stimulate economic activity and consumer choice.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to any person who may apply for a TCO in respect of goods, subject to the condition that the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The legislation operates on a Commonwealth level, with its scope extending to the entire nation. If the CEO determines that an application meets the core criteria, which includes the absence of substitutable goods produced in Australia in the ordinary course of business, a TCO is issued, effectively reducing the customs duty rate for the specified goods. In the case of McPherson's Consumer Products, a TCO was granted for certain self-sharpening knife sets, resulting in a duty rate of free, down from the general rate of 5%. The TCO mechanism does not affect existing rights or impose liabilities on persons other than the Commonwealth in relation to actions taken prior to the TCO's effective date.
Key Provisions
The primary operative sections of this legislation, specifically Tariff Concession Order No. 1051157, are sections 269C, 269B, 269E, and 269P(3) of the Customs Act 1901. These sections stipulate that a Tariff Concession Order (TCO) may be made by the Chief Executive Officer of Customs (CEO) if the application for the TCO meets certain core criteria. Section 269C requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of key terms, such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, section 269P(3) mandates that the CEO must issue a written order declaring that the specified goods are subject to the prescribed tariff concession. In this case, McPherson's Consumer Products applied for a TCO for certain self-sharpening knife sets, and the CEO determined that these goods qualify for a tariff concession, resulting in a 5% duty rate being reduced to free duty.
The Customs Act 1901 imposes several obligations and requirements on the parties involved. Firstly, any person who wishes to apply for a TCO must do so in writing and must ensure that their application meets the core criteria outlined in section 269C. The CEO, upon receiving a valid application, must then assess whether the application meets these criteria and, if satisfied, must make a written TCO as per section 269P(3). Additionally, the CEO is required under section 269K(1) to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made. In this instance, the CEO did not receive any submissions. Furthermore, the Act ensures that the TCO does not disadvantage any person or impose liabilities on them in respect of actions taken before the TCO's effective date.
The Act also outlines specific consequences and penalties for breaches of its provisions. Although the explanatory statement does not detail specific criminal or civil penalties, the Customs Act 1901 generally provides for both criminal and civil penalties for breaches of its provisions. Criminal penalties can include fines and imprisonment, while civil penalties can include fines and other monetary penalties. The exact penalties would depend on the nature and severity of the breach, as well as any relevant provisions within the Customs Act 1901 and other related legislation. Additionally, any party found to be in breach of the Act may face additional administrative consequences, such as the revocation of tariff concessions or other regulatory sanctions.
In conclusion, Tariff Concession Order No. 1051157, under the Customs Act 1901, provides a mechanism for reducing the customs duty on certain self-sharpening knife sets to free duty. The CEO must ensure that applications for TCOs meet the core criteria and must publish notices in the Gazette to allow for submissions from interested parties. The Act imposes specific obligations on applicants and the CEO, and while the explanatory statement does not detail specific penalties, the Act generally provides for both criminal and civil penalties for breaches, in addition to any administrative consequences.