EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120784
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 stainless steel and/or plastic tongs on 24 June 2011.
Instrument
TCO No 1120784 was made on 12 September 2011. It declares that those certain stainless steel and/or plastic tongs 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. 1120784 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 was enacted to regulate the customs and border control of Australia, providing the legal framework for the importation and exportation of goods. One of the mechanisms within the Act is the provision for Tariff Concession Orders (TCOs), which were introduced to address the need for temporary reductions or exemptions in customs duty for certain goods, provided specific criteria are met. This approach helps to support industries and consumers by lowering the cost of imported goods under particular circumstances. The enacting body responsible for these provisions is the Parliament of Australia, with the policy objective being to facilitate trade and economic efficiency by making certain goods more affordable through duty concessions. The Tariff Concession Instrument No. 1120784 exemplifies this by reducing the duty on specific stainless steel and/or plastic tongs to zero, following an application and assessment by the Chief Executive Officer of Customs.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aiming to apply a lower rate of customs duty on certain goods. This legislative framework applies to any individual or entity seeking to import goods that are not already produced in Australia and for which a TCO can be applied. The geographic scope of this Act is national, as it pertains to all importation activities within Australia. Section 269SJ of the Act excludes certain goods from the TCO scheme, ensuring that the benefits are reserved for specific cases where Australian production does not substitute the imported goods. The commencement of a TCO, as illustrated in Tariff Concession Instrument No. 1120784, is effective from the date the application is lodged, and it does not retroactively affect any prior importation duties or liabilities, thereby safeguarding the interests of importers who may qualify for duty refunds. The CEO's decision to grant a TCO, such as the one for McPherson's Consumer Products' stainless steel and plastic tongs, hinges on the absence of substitutable Australian-produced goods, thereby ensuring that the concession is granted in the absence of local alternatives.
Key Provisions
The Customs Act 1901, as supplemented by Tariff Concession Instrument No. 1120784, provides a framework for tariff concessions that may be granted for specific goods. Section 269F (1) of the Act allows an individual or entity to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of particular goods. If the CEO determines that the application meets the core criteria under section 269C, a TCO can be issued, which reduces or eliminates the customs duty on the specified goods. In this instance, McPherson's Consumer Products applied for a TCO for certain stainless steel and/or plastic tongs on 24 June 2011, which was subsequently granted by the CEO on 12 September 2011. This TCO means that these tongs are now subject to a zero rate of duty, rather than the general rate of 5%.
The Act imposes several obligations on the CEO when processing a TCO application. The CEO must ensure that the application is not in respect of goods specified in section 269SJ, which lists goods ineligible for TCOs. If the CEO is satisfied that the application is valid, they must then determine if the core criteria in section 269C are met. This involves verifying that, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. Furthermore, the CEO is required to publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not be made, as per subsection 269K(1). Following this, the TCO is deemed to come into effect on the date the application was lodged, under subsection 269S(1).
Under this legislation, several consequences arise for non-compliance with the requirements or provisions of the TCO. While the Act does not explicitly detail civil or criminal penalties for breach, the failure to comply with the terms of a TCO could potentially lead to disputes or litigation concerning the validity of the concession. Importers, for instance, must ensure they adhere to the conditions of the TCO when importing the specified goods. Any misinterpretation or misuse of the TCO could result in the loss of the tariff concession and potentially higher duties being payable. Additionally, if an entity is found to have provided false information during the application process, this could result in legal ramifications, although specific penalties for such actions are not outlined in the Act.
The Tariff Concession Instrument No. 1120784 outlines the process and conditions under which tariff concessions can be granted for certain goods. It mandates that the CEO of Customs review and approve applications based on specific criteria and public consultation. Once a TCO is issued, it grants the specified goods a reduced or zero customs duty rate. The obligations placed on the CEO include ensuring the application meets all criteria, publishing notices for public submissions, and issuing the TCO if conditions are satisfied. Non-compliance with the terms of the TCO can lead to the loss of tariff benefits and potential legal consequences, although the Act does not detail specific penalties for breaches.