EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1119542
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.
Paul Hartmann Pty Ltd applied for a TCO in respect of certain Adult Incontinence Pads on 17 June 2011.
Instrument
TCO No 1119542 was made on 05 September 2011. It declares that those certain Adult Incontinence Pads 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. 1119542 is taken to have come into force on 17 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. 1119542 was enacted under the Customs Act 1901 to address the need for tariff concessions on specific goods not produced domestically, thereby facilitating lower customs duties for these items. The instrument was introduced to allow the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) in respect of goods where no substitutable goods are produced in Australia, aiming to provide economic benefits to importers and potentially to consumers by reducing the cost of these goods. The policy objective, as outlined in the explanatory statement, is to ensure that the application of tariff concessions does not disadvantage any party and to maintain the rights of importers. This instrument was created following an application by Paul Hartmann Pty Ltd for a TCO on certain Adult Incontinence Pads, resulting in the goods being subject to a zero rate of duty instead of the general rate of 5%.
Scope and Application
The Tariff Concession Instrument No. 1119542, under the Customs Act 1901, applies specifically to goods that are the subject of a Tariff Concession Order (TCO). The instrument concerns the application of a lower rate of customs duty to certain Adult Incontinence Pads, which were the subject of an application by Paul Hartmann Pty Ltd. The Act applies to any person or entity that imports these goods, effectively reducing their customs duty from the general rate to free, provided the goods were imported after the TCO came into force on 17 June 2011. The instrument operates within the Commonwealth jurisdiction, and its effects are confined to the specified goods, ensuring that no other goods or transactions are impacted. The TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Furthermore, the rights of importers will be beneficially affected as they can apply for a refund of duty on goods imported since the TCO came into force. The Act does not specify any exclusions or exemptions other than those detailed in section 269SJ of the Act, which excludes certain goods from being subject to a TCO. The application of this Act may be extended or further defined through subordinate instruments, although no such instruments are mentioned in this specific case.
Key Provisions
The Customs Act 1901, as amended, provides a framework for the application of tariff concession orders (TCOs) through Part XVA (sections 269B-269SJ). The main operative sections relevant to TCOs are sections 269F, 269C, 269B, and 269P. Section 269F allows for applications to be made to the Chief Executive Officer (CEO) of Customs for a TCO concerning specific goods. If the application is not for goods specified in section 269SJ, the CEO assesses whether it meets the core criteria set out in section 269C. This requires that no substitutable goods were produced in Australia on the day the application was lodged. Section 269B provides definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods'. If the CEO is satisfied that the application meets the criteria, a written TCO order is issued under section 269P(3), specifying the goods and the applicable tariff.
The obligations imposed by the Act on the parties or entities it governs are primarily on the CEO of Customs and the applicants for TCOs. The CEO must, upon receiving a valid application that does not pertain to goods excluded by section 269SJ, determine if the application meets the core criteria in section 269C. If satisfied, the CEO is required to issue a TCO. Additionally, the CEO must publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any interested parties who may oppose the TCO. Applicants must ensure their applications are detailed and meet the specified criteria to be considered valid. The Act does not impose any direct obligations on importers or other third parties beyond their right to respond to the Gazette notice if they believe the TCO should not proceed.
Breach of the provisions within the Customs Act 1901, including the issuance or application of a TCO, can lead to various consequences. While the explanatory statement does not detail specific offences or penalties, breaches of customs regulations generally attract penalties under the Customs Act and related legislation. Penalties can include fines, imprisonment, or both, depending on the nature and severity of the breach. For instance, knowingly making a false statement in a customs document can result in fines of up to $22,000 or imprisonment for up to two years, or both (section 230AB of the Customs Act). Similarly, contravening a TCO could result in the imposition of duties and penalties as if the TCO had not been issued, potentially leading to financial and legal repercussions for the entities involved.