EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1117562
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 pet mats on 02 June 2011.
Instrument
TCO No 1117562 was made on 15 August 2011. It declares that those certain pet mats 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. 1117562 is taken to have come into force on 02 June 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. 1117562 was enacted in 2011 under the Customs Act 1901 to address the need for a streamlined process for tariff concessions on certain goods. This instrument was introduced to facilitate the application of tariff concessions by the Chief Executive Officer of Customs (CEO) in cases where specific goods are not produced in Australia and thus meet the core criteria for concession eligibility. This initiative aims to reduce the tariff rates on particular imported goods, thereby benefiting importers by potentially lowering their customs duty costs. The instrument was made in response to an application by McPherson's Consumer Products for tariff concessions on certain pet mats, which was approved by the CEO after satisfying the core criteria that no substitutable goods were produced in Australia. The policy objective is to ensure that tariff concessions are granted fairly and efficiently, providing economic relief to importers without imposing additional liabilities or disadvantaging existing rights holders.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedure for Tariff Concession Orders (TCOs) which apply to goods that are subject to a lower rate of customs duty. These orders are made by the Chief Executive Officer of Customs (CEO) and apply to goods specified in the application, provided the application does not relate to goods listed in section 269SJ, which are ineligible for TCOs. A TCO application is deemed to meet the core criteria if, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This legislation has a Commonwealth reach and applies to any entity or individual making an application for a TCO for specific goods. The application process involves publishing a notice in the Gazette to allow for submissions from interested parties, although no submissions were received for TCO No. 1117562. The TCO comes into force on the date the application is lodged, and it does not affect any pre-existing rights or impose liabilities for actions taken before the registration date. Importers, however, may benefit from the ability to apply for a refund of duty on goods imported since the effective date of the TCO.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Order (TCO) No. 1117562, declare certain pet mats as goods to which a lower rate of customs duty applies (Section 269P(3)). This instrument was made on 15 August 2011, following an application by McPherson's Consumer Products on 02 June 2011. The order specifies that these pet mats are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, granting them a free rate of duty instead of the general rate of 5%. The TCO is deemed to have come into force on the date the application was lodged, as per subsection 269S(1) of the Customs Act 1901.
The Act imposes specific obligations and requirements on the parties involved. McPherson's Consumer Products, the applicant, must ensure their application for a TCO meets the core criteria as stipulated in section 269C of the Act. The Chief Executive Officer of Customs (CEO) has the duty to decide whether the application meets these criteria, which include verifying that no substitutable goods were produced in Australia on the date of application. Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have reasons to oppose the TCO. In this case, the CEO did not receive any submissions against the TCO.
Breaching the requirements set out in the Customs Act 1901 can result in various consequences. If an entity fails to comply with the provisions regarding the application of a TCO, they may face civil or criminal penalties. However, the explanatory statement does not specify the exact nature of these penalties. The Act does provide for the possibility of refunds for importers of goods subject to a TCO, under paragraph 126(1)(r) of the Regulations, for duty paid on imports since the TCO came into force. Importantly, the TCO itself does not impose any new liabilities on any person, and it does not affect the rights of any person (other than the Commonwealth) as at the date of registration in a way that disadvantages them or imposes liabilities for actions taken before the registration date.