EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127158
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 milk frothers on 11 August 2011.
Instrument
TCO No 1127158 was made on 02 November 2011. It declares that those certain milk frothers 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. 1127158 is taken to have come into force on 11 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 Parliament of Australia, addresses the need to streamline the process for tariff concessions on imported goods. The Act, specifically under Part XVA, empowers the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. McPherson's Consumer Products sought a TCO for certain milk frothers, which was granted on 2 November 2011, after the CEO determined that no substitutable goods were produced in Australia. This legislative framework ensures that the application process is transparent and open to public input, with the CEO required to publish notices in the Gazette inviting submissions. The policy objective is to facilitate trade by reducing duty rates where appropriate, benefiting importers by potentially allowing them to claim refunds for duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, under which Tariff Concession Orders (TCOs) may be made, applies to individuals and entities that are involved in the importation of goods into Australia. Specifically, the Act applies to those who seek to benefit from reduced customs duty rates on certain goods by applying for a TCO. The scope of the Act extends to the Chief Executive Officer of Customs, who has the authority to make a TCO if the application meets the core criteria as outlined in the Act. The TCO in question, Instrument No. 1127158, applies to certain milk frothers and was made to McPherson's Consumer Products, effectively granting them tariff concessions on these goods. The Act applies nationally across Australia, and its jurisdiction is determined by the Commonwealth. Notably, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ of the Act. The application of the Act can be extended or restricted through subordinate instruments, although the primary legislation itself does not explicitly state this. The TCO in question came into effect on the date the application was lodged, which is 11 August 2011, and it does not affect the rights of persons in respect of anything done before the date of registration.
Key Provisions
The main sections of the Customs Act 1901 pertinent to Tariff Concession Orders (TCOs) are sections 269C, 269F, and 269P. Section 269F allows for applications to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C outlines the core criteria that must be met for an application to be considered, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these core criteria, section 269P(3) mandates the CEO to make a written order, or TCO, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
Entities such as McPherson's Consumer Products, who apply for a TCO, must ensure that their application details the specific goods and demonstrates that no substitutable goods were produced in Australia on the application date. The CEO of Customs is obliged to review these applications and, if they meet the core criteria, to publish a notice in the Gazette inviting any interested parties to submit objections. If no objections are received, the CEO must proceed to make the TCO. The TCO is effective from the date the application was lodged, as stipulated in section 269S(1) of the Act.
Failing to comply with the requirements of the Customs Act 1901, such as submitting an application that does not meet the core criteria, may result in the CEO refusing to issue a TCO. No specific offences, penalties, or consequences are outlined for breaches of the Act in the Explanatory Statement, but the implications of non-compliance could include the continuation of higher duty rates for the goods in question. The Act ensures that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person in respect of actions taken before the date of registration of the TCO. Importers, however, stand to benefit from the TCO by potentially applying for a refund of duty on goods imported since the effective date of the TCO.