EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1130498
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 tableware and/or kitchenware on 02 September 2011.
Instrument
TCO No 1130498 was made on 28 November 2011. It declares that those certain tableware and/or kitchenware 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. 1130498 is taken to have come into force on 02 September 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, provides for the administration of customs duties and the facilitation of trade. Part XVA of this Act introduced a scheme allowing the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that lower the rate of customs duty on specified goods. This legislative framework was designed to address the need for a streamlined process to reduce customs duty on certain imported goods, thereby supporting businesses by making these goods more competitively priced against locally produced alternatives. The policy objective is to promote fair trade practices by ensuring that imported goods are not disadvantaged by unnecessarily high tariffs, provided they do not replace domestic production. McPherson's Consumer Products' application for a TCO concerning tableware and kitchenware exemplifies this process, resulting in a duty-free concession for these goods, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), which apply reduced rates of customs duty to specified goods. This Act applies to any person or entity that imports goods into Australia and seeks to benefit from a lower customs duty rate as outlined in a TCO. The Act's application is national, governed under the Commonwealth, and it extends to any goods for which an applicant can demonstrate that no substitutable goods are produced in Australia. The application process requires the CEO to assess whether the goods in question meet the core criteria, specifically that no substitutable goods are produced in Australia in the ordinary course of business. If the CEO is satisfied that the application meets these criteria, a TCO is issued, which has retrospective effect from the date the application was lodged. Notably, TCOs do not disadvantage any person other than the Commonwealth and do not impose any liabilities on any person for actions taken before the TCO's registration. The Act does not explicitly state exclusions or thresholds for TCO applications beyond those goods specified in section 269SJ of the Act that cannot be subject to a TCO. The scope and application of the Act may be further detailed through subordinate instruments, which can provide additional definitions and guidelines for the implementation of TCOs.
Key Provisions
The primary operative sections of this legislation are sections 269F, 269C, 269P, and 269K of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria (section 269C), such as no substitutable goods being produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must make a written order (section 269P). Section 269K requires the CEO to publish a notice in the Gazette, inviting any interested parties to submit objections to the proposed TCO. The TCO is taken to have come into force on the day the application was lodged (subsection 269S(1)).
The obligations imposed by the Act on the parties or entities it governs include the requirement for a person to apply to the CEO for a TCO (section 269F). The CEO must then assess the application against the core criteria (section 269C), which includes ensuring that no substitutable goods were produced in Australia on the application date. If the CEO determines that the application meets the criteria, they must make a written TCO (section 269P). The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). The CEO must consider any submissions received before making a final decision on the TCO.
There are no explicit offences or penalties mentioned in the text for the breach of the TCO provisions. However, the failure to comply with the requirements of the TCO or the Customs Act could lead to civil or criminal consequences, such as fines or penalties, under other relevant sections of the Customs Act or related legislation. The maximum penalties for breaches of the Customs Act are set out in section 236 of the Act, which can include fines of up to $22,200 for individuals and $111,000 for corporations, as well as imprisonment in some cases. It is essential to note that these penalties are not specific to the TCO provisions but apply generally to breaches of the Customs Act.
Overall, the legislation provides a clear framework for the application, assessment, and implementation of Tariff Concession Orders. The obligations placed on the CEO and applicants ensure that the process is transparent and allows for public input. While the text does not detail specific penalties for breaching the TCO provisions, the broader penalties under the Customs Act serve as a deterrent against non-compliance.