EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114755
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 Pty Ltd applied for a TCO in respect of certain laundry bags on 11 May 2011.
Instrument
TCO No 1114755 was made on 25 July 2011. It declares that those certain laundry bags 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. 1114755 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, includes provisions for the application of tariff concession orders (TCOs) through which certain goods may benefit from reduced rates of customs duty. This mechanism was introduced to address the need for economic incentives that could stimulate trade and industry by lowering the cost of imported goods. Tariff Concession Instrument No. 1114755, made under this Act, specifically aims to provide a tariff concession for certain laundry bags, recognising that these goods do not have substitutable products manufactured domestically. The instrument was enacted to ensure that the tariff concessions do not disadvantage existing rights and do not impose new liabilities on individuals, thereby maintaining a balance between economic incentives and legal certainty.
Scope and Application
The Tariff Concession Instrument No. 1114755 under the Customs Act 1901 applies to specific goods, namely certain laundry bags, that have been granted a concession in terms of customs duty as a result of an application made by McPherson's Consumer Products Pty Ltd. The application was processed by the Chief Executive Officer of Customs (CEO) who assessed the eligibility of these goods for the concession based on the criteria outlined in the Act. These criteria include the absence of substitutable goods produced in Australia, meaning that no equivalent goods were being manufactured domestically that could serve the same purpose as the laundry bags in question. This instrument facilitates the reduction of customs duty on these goods, from a general rate of 5% to a duty-free status, thereby potentially benefiting importers by allowing them to claim refunds for duties paid on these goods prior to the concession date. The instrument's application is confined to the Commonwealth jurisdiction, and it does not disadvantage any individual or entity by imposing liabilities for actions taken prior to the issuance of the Tariff Concession Order. The instrument came into force on the date the application was lodged, which was 11 May 2011.
Key Provisions
The key provisions of Tariff Concession Instrument No. 1114755 (referred to as TCO No. 1114755) under the Customs Act 1901 are primarily set out in sections 269C, 269B, 269D, 269E, 269F, 269P, and 269K. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of specified goods. If the CEO determines that the application meets the core criteria, notably that no substitutable goods are produced in Australia in the ordinary course of business (section 269C), a TCO can be issued (section 269P(3)). This order effectively lowers the customs duty rate on the specified goods. For the particular case of McPherson's Consumer Products Pty Ltd, the TCO No. 1114755 declares that certain laundry bags are subject to a zero duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, which contrasts with the general 5% duty rate.
The obligations under this legislation for McPherson's Consumer Products Pty Ltd and other entities include the submission of a valid TCO application that meets the criteria specified in section 269C. If the CEO is satisfied that the application meets these criteria, they must make a TCO. The CEO is also mandated to publish a notice in the Gazette inviting submissions from any interested parties who may oppose the TCO (section 269K). Additionally, the CEO must ensure that the TCO does not disadvantage any person other than the Commonwealth or impose liabilities on such persons in respect of actions taken before the TCO is registered (subsection 269S(1)).
In terms of consequences for non-compliance or breach, the Act does not explicitly outline specific offences or penalties for failing to adhere to the terms of the TCO. However, the general legal framework under which the Customs Act operates implies that non-compliance with customs regulations can lead to administrative penalties, fines, or legal action. The specific penalties would be determined by the relevant provisions of the Customs Act and any other applicable legislation, such as the Crimes Act 1914, which might impose fines or imprisonment for more serious breaches involving fraud or willful misconduct.
The TCO No. 1114755 also has implications for importers, who may apply for a refund of duty on goods imported since the effective date of the TCO under paragraph 126(1)(r) of the Regulations. This provision ensures that importers are not disadvantaged and can benefit from the reduced duty rates as soon as the TCO comes into force, which is on the date the application was lodged (subsection 269S(1)). The TCO does not impose any new liabilities on any person, which safeguards against any retrospective financial burdens on affected parties.