EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1125803
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.
Baden P Morris applied for a TCO in respect of certain baby bottles on 01 August 2011.
Instrument
TCO No 1125803 was made on 17 October 2011. It declares that those certain baby bottles 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. 1125803 is taken to have come into force on 01 August 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. 1125803, enacted under the Customs Act 1901, was introduced to address the need for tariff concessions on specific goods, in this instance certain baby bottles, to promote accessibility and affordability for Australian consumers. This instrument was created to provide relief by granting a tariff concession order (TCO) that reduces the customs duty on these goods from the general rate to free, provided that no substitutable goods are produced in Australia. The instrument was developed following an application by Baden P Morris on 1 August 2011, and it was formally made on 17 October 2011, by the Chief Executive Officer of Customs (CEO) who determined that the application met the core criteria under section 269C of the Act. The policy objective here is to facilitate the import of goods that are not domestically produced, thereby supporting consumer access to a wider range of products at potentially lower costs.
Scope and Application
The Tariff Concession Instrument No. 1125803, made under the Customs Act 1901, applies to goods specified in the Instrument, namely certain baby bottles, for which a Tariff Concession Order (TCO) has been granted. The TCO applies to these specific goods by reducing the rate of customs duty to zero, which was the general rate of 5% prior to the concession. The application of this Instrument is limited to the goods specified and does not extend to any other goods not listed in the Instrument. The TCO is applicable across the Commonwealth of Australia, governed by federal customs laws. There are no exclusions or exemptions explicitly stated within the Instrument itself, but the application of the TCO is contingent upon the criteria set out in the Customs Act 1901, particularly sections 269C and 269P. The scope of the Act may be further defined or extended by subordinate instruments, which could provide additional details or conditions for the application of TCOs.
Key Provisions
The Tariff Concession Instrument No. 1125803, under the Customs Act 1901, is an order that provides tariff concessions for certain baby bottles. The instrument was made under section 269F of the Act, which allows the Chief Executive Officer (CEO) of Customs to grant a Tariff Concession Order (TCO) if certain criteria are met. Specifically, section 269C of the Act stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This definition of substitutable goods is further elaborated in sections 269B and 269D of the Act.
For the purposes of this TCO, the CEO determined that the application by Baden P Morris for tariff concessions on certain baby bottles met these criteria, as no substitutable goods were being produced in Australia. Consequently, the CEO issued a written order, TCO No. 1125803, which declares that the baby bottles are subject to the terms of item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%. As per subsection 269S(1) of the Act, the TCO is considered to have come into force on the day the application was lodged, in this case, 1 August 2011.
The obligations under this TCO primarily concern the CEO’s role in assessing and granting the tariff concession. The CEO must ensure that the application meets the criteria outlined in the Act, which involves verifying that no substitutable goods are produced in Australia. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested party to submit objections to the TCO. In this instance, no submissions were received. The TCO also ensures that it does not affect the rights of any person other than the Commonwealth as at the date of registration and does not impose any liabilities on any person for actions taken prior to the TCO's registration.
Breaches of the provisions in the Customs Act 1901 or the related Regulations can result in civil and criminal penalties. Section 281 of the Act outlines various offences related to the making of false statements, evading duty, and other fraudulent activities related to customs. The penalties for these offences can include fines and imprisonment. For example, under section 281(1), a person who commits an offence against the Act can be fined up to 10,000 penalty units or imprisoned for up to five years, or both, for serious offences. Similarly, subsection 281(2) specifies that a person who contravenes a regulation under the Act can be fined up to 1,100 penalty units or imprisoned for up to 12 months, or both, for less serious regulatory breaches. These penalties underscore the importance of compliance with the requirements set out in the Act and the TCO.