EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1114757
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 on 11 May 2011.
Instrument
TCO No 1114757 was made on 25 July 2011. It declares that those certain kitchenware 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. 1114757 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 Tariff Concession Instrument No. 1114757, made under the Customs Act 1901, aims to provide a mechanism for the Chief Executive Officer of Customs to grant tariff concessions on specific imported goods. Enacted in 2011, this legislation addresses the need to lower customs duty rates for certain goods that are not produced in Australia or do not have substitutable domestic alternatives. The instrument was introduced to facilitate trade by reducing the financial burden on importers, thereby potentially increasing the competitiveness of these goods in the Australian market. The instrument came into force on the date the application was lodged, 11 May 2011, and it ensures that the rights of importers are protected while not imposing any new liabilities on them. This approach aligns with the broader policy objective of supporting trade and economic efficiency within the framework of the Customs Act.
Scope and Application
The Customs Act 1901, specifically under Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can reduce the customs duty rate on certain goods. The scope of this legislation applies to any person or entity that seeks to reduce the customs duty on specific goods by applying for a TCO. The Act mandates that for a TCO to be issued, the CEO must determine that no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. This legislation operates at a national level, with the geographic reach extending across all states and territories within Australia, as it pertains to the Commonwealth’s customs duties. However, it is worth noting that certain goods specified in section 269SJ of the Act are excluded from the benefits of a TCO. The Act allows for further application and interpretation of its provisions through subordinate instruments, such as the Customs Tariff Act 1995. For instance, TCO No. 1114757, issued on 25 July 2011, applies to certain kitchenware, reducing the duty rate from 5% to free, based on the CEO’s determination that no substitutable goods were produced in Australia.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 1114757 (TCO No. 1114757) under the Customs Act 1901 (section 269P) require the Chief Executive Officer of Customs (CEO) to make a written order, known as a Tariff Concession Order (TCO), when satisfied that an application for a TCO meets the core criteria. Specifically, section 269C of the Act stipulates that an application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) further mandates that if the CEO is satisfied with the application, they must issue a TCO declaring that the goods specified in the application are subject to a prescribed rate of duty in Schedule 4 of the Customs Tariff Act 1995. In this case, TCO No. 1114757 was made on 25 July 2011, declaring that certain kitchenware are subject to a zero rate of duty as per item 50 of Schedule 4, as the CEO was satisfied that no substitutable goods were produced in Australia.
The obligations imposed by the Act on the parties or entities it governs include the requirement for applicants to submit a valid application for a TCO to the CEO, who must then determine whether the application meets the core criteria as outlined in section 269C. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties once an application is accepted as valid (subsection 269K(1)). In this instance, McPherson's Consumer Products applied for a TCO in respect of certain kitchenware on 11 May 2011. The CEO published a notice in the Gazette, but did not receive any submissions in response to the invitation. Furthermore, the Act requires that TCOs do not affect the rights of any person (other than the Commonwealth) in a manner that would disadvantage them or impose liabilities in respect of actions taken before the TCO's registration date. TCO No. 1114757 came into force on 11 May 2011, the day the application was lodged, as per subsection 269S(1) of the Act.
Regarding offences, penalties, or consequences for breach, the Act does not explicitly state specific penalties for failing to comply with the requirements of a TCO. However, any breach of the Customs Act 1901 could potentially lead to civil or criminal consequences, including fines and imprisonment. For instance, section 203 of the Customs Act provides that a person who wilfully makes a false statement or representation in a document required or authorised by the Act is liable to a penalty of up to 10,000 penalty units or imprisonment for up to five years, or both. In the context of TCOs, non-compliance with the conditions of the order could result in the imposition of the correct duty on the goods, and possibly additional penalties for any associated fraud or misrepresentation.