EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1126563
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.
Spice Masters Australia Pty Ltd applied for a TCO in respect of certain sterilizer system on 05 August 2011.
Instrument
TCO No 1126563 was made on 02 November 2011. It declares that those certain sterilizer system 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. 1126563 is taken to have come into force on 05 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 Customs Act 1901, enacted by the Australian Parliament, facilitates the implementation of Tariff Concession Orders (TCOs) to provide reduced customs duty rates for certain goods. These concessions are designed to alleviate the financial burden on importers by exempting or reducing the duty on specified items, thereby encouraging trade and economic efficiency. The Act empowers the Chief Executive Officer of Customs to grant these concessions upon application, subject to the goods not being substitutable with those produced domestically and meeting other criteria set forth in the legislation. The policy objective is to support Australian businesses and consumers by making essential goods more affordable through reduced customs duties.
The Tariff Concession Instrument No. 1126563, issued under the Customs Act 1901, addresses a specific instance where Spice Masters Australia Pty Ltd applied for tariff concessions on certain sterilizer systems. The application was successful as no substitutable goods were produced in Australia at the time. Consequently, the instrument declares that these sterilizer systems are subject to a zero percent duty rate, down from the general rate of 5%. This initiative is intended to benefit importers and potentially lower costs for end-users, aligning with the broader policy of promoting trade efficiency and economic growth.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to provide lower rates of customs duty on specified goods. An entity or individual can apply for a TCO for goods if certain criteria are met, such as the absence of substitutable goods being produced in Australia at the time of application. The application must not pertain to goods excluded under section 269SJ of the Act. Upon meeting the core criteria as outlined in sections 269C, 269B, and 269D, the CEO issues a TCO, which specifies the prescribed item in the Customs Tariff Act 1995 Schedule 4 to which the goods pertain. This TCO does not retroactively affect the rights of any person other than the Commonwealth and imposes no liabilities on persons for actions taken prior to the order's registration. The application process includes publishing a notice in the Gazette to invite any objections, although no submissions were received for TCO No. 1126563. This instrument, which came into force on the date of application, allows importers of the affected goods to apply for duty refunds since the effective date of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1126563 under the Customs Act 1901 (section 269C) require the Chief Executive Officer of Customs (CEO) to consider an application for a Tariff Concession Order (TCO) if no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. If the CEO is satisfied that the application meets the core criteria, they must make a written order (section 269P(3)) declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, thus applying a lower rate of customs duty. For this particular TCO, item 50 of Schedule 4 applies to certain sterilizer systems, reducing the duty from the general rate of 5% to free (section 269P(3)).
The obligations imposed on the parties by this Act include the requirement for the CEO to ensure that applications for a TCO are made in accordance with the provisions of the Customs Act 1901. Specifically, the CEO must verify that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Additionally, the CEO is obligated to publish a notice in the Gazette, inviting submissions from any interested parties who might oppose the making of a TCO (subsection 269K(1)). In this case, the CEO did not receive any submissions against the TCO for the certain sterilizer systems.
The Act also outlines potential consequences for non-compliance. While the explanatory statement does not specify offences or penalties directly related to the making of a TCO, breaches of other provisions within the Customs Act 1901 could result in penalties. For example, section 225 of the Customs Act 1901 provides for criminal penalties, including fines and imprisonment, for offences such as fraudulent importation or attempts to evade duty. In the context of this TCO, the primary consequence of non-compliance would likely involve the failure to adhere to the terms and conditions of the concession, potentially leading to the revocation of the concession or other administrative actions by the CEO.