EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1051469
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 barbecue sets on 18 November 2010.
Instrument
TCO No 1051469 was made on 07 February 2011. It declares that those certain barbecue 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. 1051469 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, enacted by the Commonwealth Parliament, establishes a framework for the imposition of customs duties on imported goods. It was introduced to regulate and manage the import and export of goods, ensuring the collection of appropriate duties and the enforcement of trade regulations. The Act provides for the granting of tariff concession orders (TCOs) by the Chief Executive Officer of Customs, which allow for reduced customs duty rates on specified goods. This was designed to address economic and trade policy objectives by providing relief to certain industries or sectors that may benefit from lower import duties, thereby promoting fair competition and economic efficiency. The explanatory statement for Tariff Concession Instrument No. 1051469, issued in 2011, exemplifies this process, detailing how McPherson's Consumer Products successfully applied for a TCO for certain barbecue sets, resulting in a duty rate reduction from 5% to free. This legislative mechanism ensures that the process is transparent and allows for public consultation, as evidenced by the absence of submissions opposing the TCO in this instance.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a mechanism for the Chief Executive Officer of Customs (CEO) to grant lower rates of customs duty on certain goods. These concessions apply to goods specified in a TCO, and the process begins when an application is submitted under section 269F of the Act, provided the goods do not fall under the exclusions set out in section 269SJ. For an application to meet the core criteria for a TCO, it must be established that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, 269E and 269F of the Act. If the CEO is satisfied with the application, a written TCO is issued, as per section 269P(3), which declares the applicable tariff item for the specified goods. The TCO mechanism is available to any person who meets the eligibility criteria and applies for a concession, and it operates nationally, affecting importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO's effective date. This process ensures that no existing rights or liabilities of non-Commonwealth entities are adversely affected by the issuance of a TCO.
Key Provisions
The main operative sections of the Customs Act 1901, particularly those relevant to Tariff Concession Orders (TCOs), include section 269F (2) which allows an application to be made for a TCO, and section 269C which specifies the core criteria that must be met for an application to be considered. Section 269P(3) mandates that if the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, a written order (TCO) must be made declaring the goods in question as subject to the tariff concession. These sections clearly define the process and conditions for granting tariff concessions on certain goods.
The obligations and requirements imposed by the Act on parties or entities it governs include ensuring that any application for a TCO is made in accordance with the specified criteria. Specifically, applicants must demonstrate that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. This involves a thorough assessment of local production capabilities and the nature of the goods in question. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties, although in this instance, no submissions were received.
Failure to comply with the requirements of the Act can result in civil or criminal consequences. Under the Customs Act 1901, breaches of the tariff concession provisions may be subject to penalties as outlined in the Customs Act 1901 and the Crimes Act 1914. The maximum penalties can include substantial fines and, in some cases, imprisonment, depending on the severity of the breach. These consequences are designed to enforce adherence to the legislative requirements and protect the integrity of the tariff concession scheme.