EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120060
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.
Regional Pharmaceuticals Pty Ltd applied for a TCO in respect of certain Mosquito Repellent on 22 June 2011.
Instrument
TCO No 1120060 was made on 12 September 2011. It declares that those certain Mosquito Repellent 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. 1120060 is taken to have come into force on 22 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 Customs Act 1901, enacted by the Australian Parliament, facilitates the creation of Tariff Concession Orders (TCOs) to provide duty concessions for certain goods, addressing the need for economic benefits and competitive parity in specific industries. The Act allows the Chief Executive Officer of Customs to grant these concessions, provided certain criteria are met, such as the absence of substitutable goods produced in Australia. This legislative framework was designed to ensure that Australian businesses and consumers can access goods at reduced tariff rates, thereby fostering economic growth and consumer welfare. The Tariff Concession Instrument No. 1120060, issued in 2011, exemplifies this mechanism by granting a duty-free status to certain mosquito repellents, following a determination that no substitutable goods were produced in Australia, thereby directly benefiting the importer and the broader market.
Scope and Application
The Customs Act 1901, under Part XVA, authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCO) that reduce customs duty rates on specific goods. This applies to any person or entity that seeks to import goods eligible for such concessions. The geographic reach of this Act is national, as it operates under the Commonwealth of Australia. The Act excludes certain goods from being subject to a TCO as per section 269SJ, and it also specifies that no substitutable goods should be produced in Australia when an application is made, as outlined in sections 269C and 269D. The application process requires that an applicant must meet core criteria, which include the absence of substitutable goods produced in Australia. The scope of the Act can be further extended through subordinate instruments which may provide additional details or specific conditions on how the Act is applied. In the specific case of Mosquito Repellent, TCO No. 1120060 was issued on 12 September 2011, setting the duty rate at free, whereas the general duty rate is 5%.
Key Provisions
The key operative sections of this legislation (section 269F, section 269C, and section 269P(3) of the Customs Act 1901) establish the framework for the creation of Tariff Concession Orders (TCOs). Section 269F allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO regarding specific goods. If the CEO determines that the application does not pertain to goods listed in section 269SJ, which are ineligible for a TCO, they proceed to assess whether the application meets the core criteria outlined in section 269C. This core criteria requires that, on the date of the application, there were no substitutable goods produced in Australia in the ordinary course of business. Once these criteria are met, section 269P(3) mandates that the CEO must issue a written TCO, specifying the applicable duty rate from Schedule 4 of the Customs Tariff Act 1995.
The Act imposes several obligations on the parties involved. The CEO must ensure that any TCO application is assessed against the criteria set out in section 269C. This involves verifying that no substitutable goods are being produced in Australia on the application date. The CEO must also publish a notice in the Gazette (subsection 269K(1)) inviting any interested party to submit any objections to the TCO. Additionally, once a TCO is made, it provides benefits to importers, allowing them to apply for a duty refund on goods imported from the date the TCO came into force under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901 can result in various consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance with the TCO process, breaches of other sections of the Customs Act can result in substantial penalties. For instance, section 247A of the Act outlines that anyone found guilty of an offence against the Act may be liable to a fine of up to 10,000 penalty units or imprisonment for up to 10 years, or both, depending on the severity of the offence. These penalties underscore the importance of adhering to the statutory requirements and processes outlined in the Act.
In summary, the legislation provides a structured approach for the creation of Tariff Concession Orders, ensuring that eligible goods receive a reduced rate of customs duty. The obligations placed on the CEO and other parties are designed to maintain the integrity of the process and provide clarity for importers and other stakeholders. The potential consequences for non-compliance highlight the seriousness with which the law treats adherence to customs regulations.