EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1052612
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.
Wholesale Group International applied for a TCO in respect of certain oxygen and carbon dioxide absorber sachets on 01 December 2010.
Instrument
TCO No 1052612 was made on 28 February 2011. It declares that those certain oxygen and carbon dioxide absorber sachets 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. 1052612 is taken to have come into force on 01 December 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 framework for the regulation of customs and excise in Australia, including the imposition of tariffs on imported goods. Part XVA of the Act establishes a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, offering lower rates of customs duty on specified goods. This mechanism aims to provide relief to importers by reducing the duty burden on certain goods, provided they meet the criteria set out in the Act. The policy objective is to facilitate trade and support economic activities by ensuring that tariff concessions are granted where appropriate, thereby encouraging the importation of goods that are not produced domestically or are not easily substitutable with locally produced alternatives. The Tariff Concession Instrument No. 1052612, enacted in 2011, is an example of this process, providing a tariff concession for oxygen and carbon dioxide absorber sachets, which were deemed not to have substitutable goods produced in Australia at the time of the application.
Scope and Application
The Customs Act 1901, specifically Part XVA, provides the framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods specified in an application, provided they meet the core criteria outlined in section 269C of the Act. To qualify, the goods must not be substitutable by products manufactured in Australia and must be used for purposes that correspond to the goods in question. The TCO process involves an application to the CEO, review against the criteria, and, if satisfied, the issuance of a written order that specifies the reduced customs duty applicable to the goods. In this instance, TCO No. 1052612 was issued for certain oxygen and carbon dioxide absorber sachets, reducing their duty from 5% to free, effective from the date of the application, 1 December 2010. The order was published in the Gazette, inviting objections which, in this case, did not eventuate. The TCO does not retroactively affect any existing rights or impose new liabilities, but importers may apply for duty refunds on imports from the effective date.
Key Provisions
The Customs Act 1901, specifically within Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which the Chief Executive Officer of Customs (CEO) can implement (sections 269F, 269C, and 269B). These orders apply a reduced rate of customs duty to specified goods. A person may apply to the CEO for a TCO concerning certain goods, provided they are not excluded under section 269SJ. The CEO must determine if the application meets the core criteria, which include the absence of substitutable goods produced in Australia at the time of application (section 269C). If the application is deemed valid, the CEO must issue a written TCO that specifies the applicable duty on the goods (subsection 269P(3)).
The obligations imposed by the Act on parties or entities include the requirement for applicants to ensure their applications meet the stipulated criteria and for the CEO to evaluate applications based on the core criteria. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any interested parties after accepting an application as valid (subsection 269K(1)). In this instance, the CEO made TCO No. 1052612 on 28 February 2011, declaring that certain oxygen and carbon dioxide absorber sachets are subject to a free rate of duty, effective from 1 December 2010.
The Act delineates specific consequences for non-compliance with its provisions. While the explanatory statement does not detail specific offences, penalties, or consequences for breach, the general principles of the Act suggest that any failure to adhere to the terms of a TCO or the application process could lead to legal ramifications. Typically, breaches of the Customs Act may result in civil or criminal penalties, including fines or imprisonment, depending on the severity and intent of the breach. The maximum penalties would be in accordance with the prevailing laws and regulations governing customs and trade practices in Australia.