EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120781
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 tableware and/or kitchenware on 24 June 2011.
Instrument
TCO No 1120781 was made on 12 September 2011. It declares that those certain tableware and/or 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. 1120781 is taken to have come into force on 24 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 Parliament of Australia, establishes a framework for the administration of customs duties, including the creation of Tariff Concession Orders (TCOs) under Part XVA. This legislative instrument aims to address the problem of ensuring that Australian industries are not unfairly disadvantaged by imposing excessive customs duties on imported goods, particularly when there are no substitutable locally produced goods. The Act allows the Chief Executive Officer of Customs to grant tariff concessions, thereby providing relief to businesses and consumers by reducing the duty payable on specified imported goods. This is achieved through the process whereby an applicant can seek a TCO if the goods in question are not substitutable by any Australian-produced alternatives, ensuring that the application of duty does not stifle local production or innovation.
The Tariff Concession Instrument No. 1120781, made in 2011, exemplifies this process, as it provides McPherson's Consumer Products with a tariff concession for certain tableware and kitchenware. This specific instrument was created following a determination by the CEO that no substitutable goods were produced in Australia, thus meeting the core criteria set out in the Customs Act. The objective of this legislation is to facilitate fair trade practices by allowing tariff reductions where appropriate, thereby supporting the competitive position of Australian businesses while also benefiting consumers through reduced prices.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders provide for lower rates of customs duty on specified goods, and apply to any person who lodges an application for such an order, provided the goods are not those specified in section 269SJ of the Act which cannot be subject to a TCO. The application must meet the core criteria set out in sections 269C, 269B, and 269D of the Act, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The TCO applies nationally across Australia, and its effects are limited to those goods specified in the order, without affecting the rights of persons other than the Commonwealth as at the date of registration. The instrument does not impose any liabilities on any person and can beneficially affect the rights of importers by allowing them to apply for a refund of duty on goods imported since the effective date of the order. The scope and application of the TCO are further defined through subordinate instruments, which may extend or restrict its application as necessary.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1120781 (referred to as TCO No. 1120781) under the Customs Act 1901, require that an application for a Tariff Concession Order (TCO) must be lodged with the Chief Executive Officer of Customs (CEO). If the CEO is satisfied that the application is valid and meets the core criteria set out in section 269C of the Act, the CEO is obliged to make a written order that declares the goods in question are subject to a lower rate of customs duty. In this case, McPherson's Consumer Products applied for a TCO for certain tableware and kitchenware on 24 June 2011 (section 269F). The CEO was satisfied that the application met the core criteria, namely that no substitutable goods were produced in Australia (section 269C), and accordingly issued TCO No. 1120781 on 12 September 2011. The TCO specifies that the tableware and kitchenware are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with a rate of duty of free, as opposed to the general rate of duty of 5%.
The obligations imposed by the Act on the parties governed by it include the requirement for the CEO to consider each application for a TCO, to ensure it meets the core criteria, and to publish a notice in the Gazette inviting submissions from any interested parties. If the CEO makes a TCO, the rights of importers will be beneficially affected, as they 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 (subsection 269S(1)). The CEO must also ensure that the TCO does not affect the rights of a person, other than the Commonwealth, so as to disadvantage that person or impose liabilities on a person in respect of anything done or omitted to be done before the date of registration.
Any breach of the provisions of the Customs Act 1901, including failure to comply with the requirements for a TCO, may result in civil or criminal consequences. For example, section 286 of the Act provides that a person who knowingly or recklessly makes a false or misleading statement in an application for a TCO is guilty of an offence and liable to a penalty of up to $22,200 or imprisonment for up to two years, or both. Similarly, section 287 of the Act provides that a person who is knowingly or recklessly involved in the making of a false or misleading statement in a TCO application is guilty of an offence and liable to a penalty of up to $44,400 or imprisonment for up to five years, or both. The maximum penalties for these offences are set out in the Criminal Code Act 1995.