EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114753
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 kitchenware, being plastic ice block moulds on 11 May 2011.
Instrument
TCO No 1114753 was made on 25 July 2011. It declares that those certain kitchenware, being plastic ice block moulds 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. 1114753 is taken to have come into force on 11 May 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 Parliament of Australia, provides a framework for the administration of customs duties and tariffs. To address gaps in the tariff structure and support the importation of certain goods, the Act allows for the creation of Tariff Concession Orders (TCOs) under Part XVA, enabling the Chief Executive Officer of Customs to grant lower rates of customs duty on specified goods. This mechanism was introduced to facilitate the import of goods that are not produced in Australia and for which no suitable substitutes are available domestically. The Tariff Concession Instrument No. 1114753, issued on 25 July 2011, is an example of this process in action, as it grants a concession on plastic ice block moulds by setting their duty rate to zero, recognising the absence of substitutable goods produced in Australia. This instrument aims to align with the policy objective of reducing the cost of imported goods where appropriate, thereby benefiting consumers and importers without imposing new liabilities or disadvantaging existing rights.
Scope and Application
The Customs Act 1901, specifically under Part XVA, allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to certain goods. These TCOs are subject to a set of core criteria, one of which is that the goods for which the concession is sought must not have substitutable equivalents produced in Australia. If these criteria are met, the CEO is required to make a TCO, specifying the goods and the reduced duty rate applicable. The instrument applies to any entity that imports goods eligible for such concessions, with the specified goods in this case being plastic ice block moulds. These TCOs are effective from the date the application is lodged, and in this instance, the TCO No. 1114753 became effective on 11 May 2011, the date the application was submitted by McPherson's Consumer Products. The TCO does not retroactively affect any party's rights or impose liabilities for actions taken before its effective date, thereby ensuring that only future transactions benefit from the reduced duty rate. The TCO applies nationally and is subject to the broader regulatory framework established under the Customs Act and the Customs Tariff Act 1995.
Key Provisions
The main operative sections of this legislation pertain to the process of applying for and granting Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). A TCO can be applied for by any person, and the Chief Executive Officer of Customs (CEO) must assess whether the application meets the core criteria (section 269C). If the application is approved, a written TCO is issued (section 269P(3)), as seen in the case of Mcpherson's Consumer Products, which applied for a TCO for plastic ice block moulds and was granted one on 25 July 2011 (section 269K(1)). This TCO, No. 1114753, specifies that these kitchenware items now have a duty rate of free, down from the general rate of 5% (Schedule 4, item 50, Customs Tariff Act 1995).
The obligations and requirements imposed by the Act on the parties involved are quite straightforward. The CEO must assess the validity of TCO applications and ensure they meet the core criteria, which involves confirming that no substitutable goods are produced in Australia at the time the application is lodged (section 269C). If the criteria are met, the CEO must issue a TCO (section 269P(3)). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit any objections to the TCO (subsection 269K(1)). There are no obligations placed on applicants or third parties beyond the requirement to respond to the Gazette notice if they wish to object to the TCO.
In terms of the penalties and consequences for breach of this legislation, the Act does not specify particular sanctions for failing to comply with the provisions of a TCO or for submitting a fraudulent application. However, any actions taken in reliance on a TCO that is later found to be invalid could potentially lead to financial repercussions for the party that acted on the now-invalidated TCO. The general principle would be that any customs duties paid in error could be subject to a refund process as stipulated in the Regulations (paragraph 126(1)(r) of the Regulations). The Act ensures that the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO came into effect (subsection 269S(1)).