EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1111095
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 organizers on 01 April 2011.
Instrument
TCO No 1111095 was made on 20 June 2011. It declares that those certain organizers 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. 1111095 is taken to have come into force on 01 April 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 within which Tariff Concession Orders (TCOs) may be issued by the Chief Executive Officer of Customs (CEO). The Act was introduced to address the need for streamlined customs duties on certain imported goods, ensuring fair trade practices and economic efficiency. A TCO allows for a lower rate of customs duty on specific goods, provided the application meets the core criteria outlined in the Act. McPherson's Consumer Products applied for a TCO for certain organizers on 1 April 2011, which was subsequently approved by the CEO on 20 June 2011. The TCO, effective from 1 April 2011, declares that these organizers are subject to a 5% duty rate, down from the general rate of duty. The policy objective of this legislation is to promote trade efficiency by reducing customs duties on qualifying goods, thereby benefiting importers and supporting competitive market practices.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the creation of Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on certain goods. The Act applies to any person who may apply to the Chief Executive Officer of Customs for a TCO on behalf of goods not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The process involves the CEO assessing whether the application meets the core criteria, which is primarily determined by whether substitutable goods are produced in Australia in the ordinary course of business. The instrument extends its application nationally, affecting all importers of the specified goods within Australia. The scope of the Act is further clarified by definitions provided in sections 269D, 269E and 269F, which explain terms such as 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods'. The Act does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person in relation to actions taken before the registration of a TCO. The commencement of a TCO is effective from the day the application is lodged.
Key Provisions
The Tariff Concession Instrument No. 1111095 under the Customs Act 1901 provides a concession on customs duty for certain organizers. According to section 269P(3) of the Act, the Chief Executive Officer (CEO) of Customs is mandated to issue a Tariff Concession Order (TCO) if satisfied that an application for a TCO meets the core criteria specified in section 269C. The application from McPherson's Consumer Products for these organizers was approved because, as of the date of the application on 1 April 2011, no substitutable goods were being produced in Australia, aligning with the definition of "substitutable goods" in section 269D. Consequently, the TCO No. 1111095 declares that these organizers are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a duty-free rate.
The obligations imposed on the parties by this Act include the requirement for the CEO to ensure that the application for a TCO is valid and meets the core criteria as stipulated in section 269C. Additionally, McPherson's Consumer Products must have provided all necessary information and evidence to support their application. The CEO is also required under section 269K(1) to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be granted. The CEO's decision must be made after considering any valid submissions received. There were no submissions against the TCO in this instance, allowing the CEO to proceed with issuing the TCO.
Failure to comply with the provisions of the Customs Act 1901, including making false statements in a TCO application, could lead to significant consequences. Under section 283 of the Act, an individual or entity found guilty of an offence may face a penalty of up to 10,000 penalty units for an individual and 50,000 penalty units for a body corporate, reflecting the seriousness of breaching these regulations. Additionally, section 284 outlines that penalties for breaches can include imprisonment, fines, or both, depending on the severity and intent behind the breach. These stringent penalties underscore the importance of adhering to the legislative requirements and ensuring the integrity of the customs duty concession process.