EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1133087
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 sink and/or drain strainers on 28 September 2011.
Instrument
TCO No 1133087 was made on 04 January 2012. It declares that those certain sink and/or drain strainers 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. 1133087 is taken to have come into force on 28 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 Australian Parliament, establishes a framework for the regulation of customs duties and tariffs. It enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on specified goods. The Tariff Concession Instrument No. 1133087 was introduced to address the specific needs of businesses seeking tariff concessions. This instrument was enacted in response to an application from McPherson's Consumer Products for a tariff concession on certain sink and/or drain strainers, where it was determined that no substitutable goods were produced in Australia. This resulted in a tariff concession reducing the duty on these goods from 5% to free. The policy objective underpinning these concessions is to support businesses by reducing costs associated with customs duties on goods that are not produced domestically.
Scope and Application
The Customs Act 1901, as amended, encompasses the Tariff Concession Orders (TCOs) under Part XVA, which are instrumental in granting lower rates of customs duty on specified goods. The Act applies to entities or individuals seeking tariff concessions on goods that are not specified in section 269SJ of the Act, which outlines goods ineligible for such concessions. The process involves an application to the Chief Executive Officer of Customs (CEO), who assesses whether the goods in question meet the core criteria set out in the Act, particularly that no substitutable goods are produced in Australia in the ordinary course of business. The scope of the Act is national, as it falls under Commonwealth jurisdiction, and it extends its application to all goods imported into Australia. The Act does not specify exclusions or exemptions beyond those outlined in section 269SJ, and its implementation may be further detailed through subordinate instruments. For instance, the explanatory statement for Tariff Concession Instrument No. 1133087 illustrates how a TCO may be applied to specific goods, such as certain sink and/or drain strainers, resulting in a duty rate reduction from 5% to free.
Key Provisions
The Tariff Concession Instrument No. 1133087 under the Customs Act 1901, specifically section 269F, enables the Chief Executive Officer of Customs (CEO) to grant a Tariff Concession Order (TCO) for certain goods, such as sink and/or drain strainers, which are subject to a lower rate of customs duty (sections 269C and 269P(3)). For McPherson's Consumer Products, this resulted in the goods being subject to a free rate of duty instead of the general 5% duty rate (item 50 of Schedule 4 to the Customs Tariff Act 1995). The TCO was registered on 04 January 2012, following an application by McPherson's Consumer Products on 28 September 2011, and it is effective from that application date (subsection 269S(1)).
The Act imposes certain obligations on the CEO and the applicant. The CEO must ensure that the application does not pertain to goods specified in section 269SJ, which are ineligible for a TCO. If the CEO determines that the application meets the core criteria, they must make a TCO (section 269C). For McPherson's Consumer Products, the CEO had to confirm that no substitutable goods were produced in Australia at the time of application (section 269E). Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from interested parties if any believe the TCO should not be granted (subsection 269K(1)). McPherson's Consumer Products, however, did not receive any submissions against their application.
In the event of non-compliance with the requirements of the Customs Act 1901 or the associated regulations, there may be significant legal consequences. For example, incorrect declarations or fraudulent applications could lead to civil or criminal penalties. The specific penalties depend on the nature and severity of the breach, but they can include fines and, in serious cases, imprisonment. The maximum penalties are detailed in the relevant sections of the Customs Act and associated regulations, and these can vary based on the specific circumstances of the offence. It is essential for applicants and importers to understand and comply with the legislative requirements to avoid these potential consequences.