EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120782
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 combination skimmers and colanders on 24 June 2011.
Instrument
TCO No 1120782 was made on 12 September 2011. It declares that those certain combination skimmers and colanders 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. 1120782 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 Commonwealth Parliament, addresses the need for a scheme under which Tariff Concession Orders (TCOs) can be made to provide relief from customs duties on certain goods. The Act establishes a mechanism whereby the Chief Executive Officer of Customs can make orders that reduce or eliminate customs duty on specific goods, provided certain criteria are met. The objective of the TCO scheme is to support Australian industries by allowing the import of goods that are not produced domestically, thus ensuring that Australian consumers and businesses have access to a range of products at competitive prices. This is achieved by reducing the cost of importing these goods, thereby facilitating trade and economic activity. McPherson's Consumer Products, for example, applied for and received a TCO for combination skimmers and colanders, resulting in the elimination of customs duty on these items, which would otherwise have been subject to a 5% duty rate.
Scope and Application
The Customs Act 1901, through Part XVA, provides the framework for Tariff Concession Orders (TCOs) which apply to specific goods and can result in a concessional rate of customs duty. These orders can be applied for by any person and are subject to review by the Chief Executive Officer of Customs (CEO) to ensure they meet the core criteria outlined in the Act. These criteria include the absence of substitutable goods produced in Australia at the time of application. Once a TCO is approved, it applies to the goods from the date the application was lodged, as per the Act. The TCOs do not disadvantage existing parties or impose liabilities for actions prior to the order's effective date, but they do provide benefits to importers, including the ability to apply for duty refunds for goods imported since the TCO's commencement. The geographic reach of this legislation is national, as it applies across Australia, and while the Act itself sets the primary parameters, the scope and specifics of the TCOs can be further defined through subordinate instruments.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines the process and criteria for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). When an individual or entity, such as McPherson's Consumer Products, applies for a TCO for certain goods, the CEO must determine if the application meets the core criteria set out in section 269C. These criteria require that no substitutable goods were produced in Australia on the day the application was lodged, as defined by sections 269D and 269E. If satisfied, the CEO must then issue a written TCO, as stipulated in section 269P(3), which specifies the reduced rate of customs duty applicable to the goods in question.
The obligations imposed by the Act on applicants for a TCO include ensuring that their application is not for goods specified in section 269SJ, which are ineligible for concession. The CEO is obligated to publish a notice in the Gazette, inviting any interested parties to lodge submissions against the application as per subsection 269K(1). In the case of McPherson's Consumer Products, no such submissions were received, leading to the issuance of TCO No. 1120782 on 12 September 2011. The CEO's decision to grant the TCO is based on the absence of substitutable goods produced in Australia, ensuring the concession is granted in accordance with the statutory criteria.
Should any party breach the conditions set out by the Customs Act 1901 or the Tariff Concession Instrument, they may face legal consequences. While the explanatory statement does not specify particular offences or penalties, under Australian law, breaches of customs regulations can lead to civil or criminal penalties. These can include fines and imprisonment, depending on the severity of the breach. The maximum penalties can vary significantly, but they are determined by the specific nature of the breach and the relevant sections of the Customs Act and associated regulations. For McPherson's Consumer Products, compliance with the TCO is crucial to avoid any potential penalties or legal ramifications.