EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1105240
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 chopping boards and blocks on 07 February 2011.
Instrument
TCO No 1105240 was made on 02 May 2011. It declares that those certain chopping boards and blocks 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. 1105240 is taken to have come into force on 07 February 2011.
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 Australian Parliament, establishes a framework through which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs. This legislative instrument was introduced to address the need for providing relief on customs duty for certain imported goods, thereby fostering fair trade practices and economic efficiency. Specifically, it allows for the reduction or exemption of customs duty on goods that do not have Australian-made equivalents. In the case of Tariff Concession Instrument No. 1105240, the policy objective was to provide tariff relief on certain chopping boards and blocks by McPherson's Consumer Products, ensuring these goods are subject to a zero percent duty rate, as opposed to the general rate of 5 percent. The instrument was issued on 02 May 2011 after the CEO determined that no substitutable goods were produced in Australia. The instrument's commencement date was aligned with the date of the application, 07 February 2011, ensuring that the rights of importers are positively impacted from that date.
Scope and Application
The Tariff Concession Instrument No. 1105240, made under Part XVA of the Customs Act 1901, applies to goods specified in the instrument, in this case certain chopping boards and blocks, and to those who import such goods. The instrument was made to facilitate tariff concessions, reducing or eliminating customs duties on specified goods, thereby benefiting importers by lowering their costs. The scope of the instrument is national, applying across Australia as it pertains to the Customs Act 1901 which is a Commonwealth Act. The instrument came into effect on the date the application was lodged, 07 February 2011, in line with the commencement provisions of the Act. Importantly, the instrument does not affect any pre-existing rights or liabilities of persons other than the Commonwealth, nor does it impose any new liabilities. The instrument was made without any submissions opposing it, indicating no significant objections to the tariff concessions for the specified goods.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1105240 under the Customs Act 1901 include sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria outlined in section 269C, and that the goods are not specified in section 269SJ, the CEO must make a TCO (section 269P). The instrument declares that certain goods, in this case, chopping boards and blocks, are subject to a specified rate of customs duty. Under this particular TCO, the general rate of duty, which is 5%, is reduced to free for the specified goods.
The Act imposes several obligations on parties involved with the TCO process. For the applicant, such as McPherson's Consumer Products, the obligation is to submit a valid application to the CEO for a TCO. The CEO, upon receiving an application, must determine if it meets the core criteria and is not in respect of goods that cannot be subject to a TCO. If satisfied, the CEO is required to make a TCO and publish a notice in the Gazette, inviting submissions from any interested parties. In this instance, no submissions were received. Additionally, the Act requires that the TCO does not disadvantage any person other than the Commonwealth or impose liabilities on anyone for actions taken before the TCO came into force.
Breaches of the requirements outlined in the Customs Act 1901 can lead to various consequences. While the explanatory statement does not detail specific offences, penalties, or civil/criminal consequences for non-compliance with the TCO provisions, the Customs Act generally provides for penalties for breaches of its provisions. These penalties can include fines and imprisonment, depending on the severity of the breach. The maximum penalties are not specified in the explanatory statement but can be found in the relevant sections of the Customs Act and associated regulations.
The TCO process ensures that if the CEO is satisfied with the application and that the goods do not have substitutable alternatives produced in Australia, the application will proceed to the issuance of a TCO. This particular TCO, No. 1105240, came into effect on the date the application was lodged, 07 February 2011, and it advantageously impacts the rights of importers by allowing them to apply for a refund of duty on goods imported since that date. The rights of non-Commonwealth entities are protected by ensuring no disadvantage or liabilities are imposed by the TCO for actions taken prior to its effective date.