EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127159
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.
McPhersons Consumer Product applied for a TCO in respect of certain tea making sets on 11 August 2011.
Instrument
TCO No 1127159 was made on 02 November 2011. It declares that those certain tea making sets 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. 1127159 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 Tariff Concession Instrument No. 1127159, enacted in 2012, serves to amend the Customs Act 1901 by providing tariff concessions on specific goods, thereby addressing the need for economic incentives to support certain industries. This instrument was introduced by the Chief Executive Officer of Customs under the authority granted by the Customs Act. The underlying policy objective is to foster economic growth by reducing the customs duty on particular goods, making them more competitive in the domestic market. McPhersons Consumer Product's application for a tariff concession on certain tea making sets exemplifies this objective, as it was granted following a determination that no substitutable goods were produced in Australia, thereby meeting the core criteria set forth in the Act. This concession not only benefits the rights of importers by potentially allowing them to claim refunds for duties paid prior to the concession's effective date but also ensures that no existing rights or liabilities of non-Commonwealth entities are adversely affected.
Scope and Application
The Customs Act 1901, specifically under Part XVA, authorises the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply a lower rate of customs duty to certain goods. This process is initiated when an individual or entity applies to the CEO for a TCO concerning goods not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. For a TCO to be granted, the CEO must determine that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. This assessment is made according to the definitions provided in sections 269D, 269E, and 269F of the Act. If the application meets these criteria, the CEO issues a TCO, which declares that the goods are subject to a specified lower rate of duty as outlined in Schedule 4 to the Customs Tariff Act 1995. The TCO also includes a mechanism for public consultation, whereby interested parties can submit objections to the TCO within a specified period, although no objections were received for TCO No. 1127159. The TCO does not affect existing rights or impose liabilities on any person for actions taken before its registration.
Key Provisions
The main sections of the Tariff Concession Instrument No. 1127159, which are grounded in the Customs Act 1901, establish a framework for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (sections 269F, 269C, 269B, 269D, 269E, and 269P). Under section 269F, an application can be made to the CEO for a TCO for specified goods, provided they do not fall under the exclusions listed in section 269SJ. If the application meets the criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia at the time the application was lodged, the CEO must issue a written order (section 269P(3)). In this particular case, TCO No. 1127159 applies to certain tea making sets, with the goods being subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general 5% rate.
The obligations imposed by the Act on the parties and entities it governs primarily involve the application process and the criteria for issuing a TCO. The CEO is required to assess whether an application meets the core criteria, which include verifying that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged (section 269C). Furthermore, the CEO must publish a notice in the Gazette inviting submissions from any interested parties if they believe the TCO should not be made (subsection 269K(1)). In this instance, no submissions were received in response to the notice.
The Act does not outline specific offences, penalties, or consequences for breaches related to the issuance of TCOs. However, the Act does specify that the TCO does not affect the rights of a person (other than the Commonwealth) in a manner that disadvantages them or imposes liabilities for actions taken before the TCO was registered (subsection 269S(1)). In this context, the rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The TCO does not impose any liabilities on any person.