EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1130501
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 storage bags on 02 September 2011.
Instrument
TCO No 1130501 was made on 28 November 2011. It declares that those certain milk storage bags 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. 1130501 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, establishes a framework for the regulation of customs and excise duties, amongst other things. To address the need for flexibility in the application of customs duties, particularly in relation to the promotion of Australian industry and the facilitation of trade, the Act allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders can apply a lower rate of duty to certain goods, provided that no substitutable goods are produced in Australia and the application meets the core criteria outlined in the Act. In response to an application by McPherson's Consumer Products, Tariff Concession Order No. 1130501 was enacted, granting tariff concessions on certain milk storage bags, reducing their duty rate from 5% to free, effective from the date the application was lodged. This order aims to support the import and sale of these specific goods without imposing additional burdens or liabilities on any party except the Commonwealth, while potentially benefiting importers through duty refund provisions.
Scope and Application
The Tariff Concession Instrument No. 1130501 under the Customs Act 1901 applies to entities that have applied for and received tariff concessions on specific goods, in this case, McPherson's Consumer Products for certain milk storage bags. The instrument is issued by the Chief Executive Officer of Customs, who evaluates the application against the core criteria set out in the Act, ensuring that no substitutable goods are produced in Australia in the ordinary course of business. This application of tariff concessions extends across the Commonwealth of Australia, aligning with the broader scheme established under Part XVA of the Customs Act 1901. Notably, the instrument does not disadvantage any person or impose liabilities on anyone in respect of actions taken prior to its registration. Any person, including importers, who consider themselves affected by the tariff concession may submit objections; however, in this instance, no such submissions were received. The application of the tariff concession is also subject to the conditions and interpretations specified in the Customs Tariff Act 1995, where the specified goods are assigned a new duty rate as outlined in the instrument.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1130501 include section 269C, which outlines the core criteria that must be satisfied for a Tariff Concession Order (TCO) to be made. Specifically, the CEO must be satisfied that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Section 269F allows for applications to be made by any person for a TCO in respect of goods, provided the goods are not those specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written order declaring the goods subject to the TCO (section 269P(3)). In this case, TCO No. 1130501 specifies that certain milk storage bags are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, resulting in a duty-free rate for these goods.
The Act imposes several obligations on the parties involved. The CEO is required to consider applications for TCOs and ensure that the core criteria are met before making an order. The CEO must also 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)). McPherson's Consumer Products, as the applicant, must submit a valid application, including any necessary evidence or information to support their claim that no substitutable goods were produced in Australia. Additionally, importers of the goods can apply for a refund of duty on goods imported since the TCO came into force, as provided under paragraph 126(1)(r) of the Regulations.
The Customs Act 1901 and the Customs Tariff Act 1995 do not specify any particular offences, penalties, or civil/criminal consequences for breach in relation to TCOs. However, the Act does stipulate that the rights of persons other than the Commonwealth will not be adversely affected by a TCO as at the date of registration, and no new liabilities will be imposed. The TCO itself does not impose any liabilities on any person, ensuring that there are no financial penalties for non-compliance with the terms of the TCO. Nonetheless, failure to adhere to the conditions set forth in the Act or the Regulations could result in the TCO being challenged or not being granted, potentially leading to continued duty charges on the specified goods.