EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1117151
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.
Colgate Palmolive Pty Ltd applied for a TCO in respect of certain dental floss on 30 May 2011.
Instrument
TCO No 1117151 was made on 08 August 2011. It declares that those certain dental floss 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. 1117151 is taken to have come into force on 30 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 Australian Parliament, facilitates the establishment of a framework for Tariff Concession Orders (TCOs) under which certain goods may be subject to lower rates of customs duty. The primary objective of this legislation is to ensure that the Australian market remains competitive by preventing the production of certain goods domestically when cheaper imported alternatives are available. This helps maintain economic efficiency and consumer choice. The Tariff Concession Instrument No. 1117151, made by the Chief Executive Officer of Customs in 2011, exemplifies this process by granting a tariff concession for specific dental floss products. This concession was made after Colgate Palmolive Pty Ltd applied for it, and no objections were received during the consultation period, leading to the concession becoming effective from the date of the application. The concession aims to benefit importers by allowing them to apply for duty refunds on the imported goods from the effective date, without imposing any liabilities on non-Commonwealth entities.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) for certain goods, effectively reducing or eliminating the customs duty on those goods. This mechanism applies to any person or entity that submits an application for a TCO, provided that the goods in question are not specified in section 269SJ of the Act, which excludes certain types of goods from eligibility. For instance, a TCO was granted to Colgate Palmolive Pty Ltd for certain dental floss, lowering the duty from 5% to free. The application of a TCO is contingent on the CEO's determination that no substitutable goods are produced in Australia, as per sections 269C and 269D of the Act. Once a TCO is issued, it comes into effect on the date the application is lodged, and it does not affect any existing rights or impose liabilities for actions taken prior to its issuance. The CEO is mandated to publish notices of valid TCO applications in the Gazette to invite public submissions, although no submissions were received in this case. The scope of the TCO is determined nationally, with potential for further specification through subordinate instruments.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 1117151 (TCO No. 1117151) under the Customs Act 1901 are sections 269C, 269F, 269P, and 269SJ. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ, they must decide whether the application meets the core criteria specified in section 269C. If satisfied that the criteria are met, the CEO is required under section 269P(3) to make a written TCO order, declaring that the goods in question are to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies. This TCO allows for a lower rate of customs duty on the specified goods, in this case, certain dental floss, which would otherwise have a general duty rate of 5%.
The obligations imposed by the Act on parties or entities it governs include the requirement for the CEO to assess applications for TCOs against the core criteria outlined in section 269C. This involves verifying that no substitutable goods were produced in Australia on the day the application was lodged. Substitutable goods, as defined in section 269D, are goods produced in Australia that can be used in place of the goods subject to the TCO application. The CEO must also publish a notice in the Gazette inviting submissions from any interested parties who may have objections to the TCO being made, as stipulated in subsection 269K(1). In the case of TCO No. 1117151, no submissions were received, indicating that the application met the necessary criteria without opposition.
Any breach of the requirements outlined in the Customs Act 1901 could lead to various civil or criminal consequences. While the Explanatory Statement does not detail specific offences under this legislation, it is understood that the Act provides for penalties for non-compliance, which could include fines or imprisonment, depending on the nature and severity of the breach. The maximum penalties would be as prescribed by other sections within the Customs Act 1901 or related regulations. Importers and other entities affected by the TCO must ensure they adhere to the terms and conditions set out in the legislation to avoid any potential legal repercussions.