EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1105242
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 roasting sets on 07 February 2011.
Instrument
TCO No 1105242 was made on 02 May 2011. It declares that those certain roasting 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. 1105242 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 was enacted by the Parliament of Australia and provides the framework for the administration of customs and excise duties. Specifically, Part XVA of the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These TCOs apply reduced rates of customs duty to specified goods, provided certain criteria are met. The 2011 Explanatory Statement for Instrument No. 1105242 under this Act outlines the process by which McPherson's Consumer Products applied for and received a TCO for certain roasting sets, resulting in a tariff concession from the standard 5% duty rate to free duty. The policy objective of this mechanism is to support Australian industries by providing tariff relief where appropriate, ensuring that such relief does not disadvantage existing stakeholders or create new liabilities. The instrument became effective on the date of the application, 7 February 2011, and importers of the affected goods are entitled to apply for duty refunds from that date.
Scope and Application
The Customs Act 1901, specifically as outlined in Part XVA, provides a framework for the application and issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The Act allows for the reduction or elimination of customs duties on certain goods, provided that they meet the core criteria set out in the legislation. A TCO can be applied for by any person, and the CEO must determine whether the application complies with the core criteria, which include ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If these criteria are met, a TCO is issued, applying a prescribed rate of duty as specified in the Customs Tariff Act 1995. This process ensures that the application of tariff concessions is both transparent and subject to public consultation, allowing interested parties to voice any objections before a TCO is finalised. The TCO in question, No. 1105242, was issued for certain roasting sets, granting them a duty-free status as of the date the application was lodged, 07 February 2011.
Key Provisions
The Customs Act 1901, as amended, includes specific provisions for Tariff Concession Orders (TCOs) under section 269F (1), which allows for the application of a lower rate of customs duty on goods specified in a TCO. Section 269C outlines the core criteria that must be met for an application to be considered valid; notably, the application must concern goods for which no substitutable goods are produced in Australia in the ordinary course of business, as defined by section 269D. If the Chief Executive Officer of Customs (CEO) is satisfied that these conditions are met, they must make a written order under section 269P(3), effectively reducing the customs duty on the specified goods. For instance, in the case of McPherson's Consumer Products, a TCO was issued on 02 May 2011, declaring that certain roasting sets would be subject to a free rate of duty instead of the general 5% rate, as no substitutable goods were produced in Australia.
The Act imposes certain obligations on both the CEO and the applicants. The CEO must ensure that any application for a TCO is considered against the core criteria and must publish a notice in the Gazette, inviting submissions from interested parties (subsection 269K(1)). In this instance, no submissions were received. The applicant, in this case McPherson's Consumer Products, must provide sufficient evidence that the goods in question meet the specified criteria, ensuring that no substitutable goods are produced in Australia. This process ensures transparency and fairness in the application and assessment of TCOs.
Should any party fail to comply with the requirements of the Act, there may be legal consequences. While the explanatory statement does not explicitly detail specific offences or penalties, breaches of the Customs Act generally can lead to civil or criminal penalties, including fines and imprisonment, depending on the severity and intent of the breach. The maximum penalties for breaches can vary but are stipulated in other sections of the Act and related regulations. It is crucial for both applicants and the CEO to adhere to the legislative framework to avoid such repercussions.
The commencement of the TCO, as outlined in subsection 269S(1), is effective from the date the application was lodged. In the case of TCO No. 1105242, this date is 07 February 2011. This commencement date ensures that the benefits of the concession apply retroactively from the date of application, which can be advantageous for importers who may be able to claim refunds for duties paid on the specified goods since that date, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person other than the Commonwealth, protecting stakeholders from any disadvantage or additional burdens as a result of the concession.