EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1133798
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 towel and carry bag sets on 06 October 2011.
Instrument
TCO No 1133798 was made on 04 January 2012. It declares that those certain towel and carry bag 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. 1133798 is taken to have come into force on 06 October 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 Commonwealth Parliament, governs the regulation of imports and exports in Australia. One of its key provisions is the establishment of a scheme under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on specific goods, provided certain criteria are met. This scheme aims to address the problem of high customs duties on imported goods that do not have a domestic equivalent or substitute, thereby potentially increasing the cost of goods for consumers. In response to an application by McPherson's Consumer Products, Tariff Concession Order No. 1133798 was issued on 04 January 2012, granting a tariff concession for certain towel and carry bag sets, reducing their customs duty rate to zero. The decision-making process included a consultation period in which no objections were received, and the order came into effect on the date of the application submission, 06 October 2011.
Scope and Application
The Tariff Concession Instrument No. 1133798, issued under the Customs Act 1901, applies to individuals or entities, such as McPherson's Consumer Products, that seek a tariff concession order (TCO) for specific goods, in this instance, certain towel and carry bag sets. The instrument is concerned with the process and criteria for applying for and granting a TCO, which reduces the rate of customs duty on eligible goods. The Act extends to the entire Commonwealth of Australia and is administered by the Chief Executive Officer of Customs, who must ensure that the application for a TCO meets specified core criteria. Notably, the application for a TCO does not apply to goods specified in section 269SJ of the Act, which includes goods that cannot be subject to a TCO. The instrument's application is contingent upon the CEO's satisfaction that no substitutable goods were produced in Australia on the date the application was lodged. Once a TCO is granted, it is effective from the date the application was lodged, and it does not retroactively affect any rights or impose liabilities on any person except the Commonwealth. The instrument's application may be further extended or restricted through subordinate instruments, such as the Customs Tariff Act 1995.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1133798 (TCO No. 1133798) under the Customs Act 1901 (section 269F) and the Customs Tariff Act 1995 (section 269P(3)), establish a process whereby the Chief Executive Officer (CEO) of Customs may grant a Tariff Concession Order (TCO) for certain goods. The CEO can grant a TCO if the applicant satisfies the core criteria, notably if no substitutable goods were produced in Australia on the day the application was lodged (section 269C). The CEO must also ensure that the goods in question are not prohibited from receiving a TCO under section 269SJ of the Act. If these conditions are met, the CEO must issue a written TCO, specifying the applicable tariff item from Schedule 4 of the Tariff (section 269P(3)). TCO No. 1133798 was issued on 04 January 2012, applying to certain towel and carry bag sets, with a duty rate of free as opposed to the general rate of 5%.
The Customs Act 1901 imposes specific obligations on the CEO of Customs regarding TCOs. These obligations include accepting valid TCO applications, determining whether the application meets the core criteria, and making a written TCO if the criteria are satisfied. Additionally, under subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who may object to the TCO. If no submissions are received, the TCO can proceed without further public objection. The CEO must also ensure that the TCO does not disadvantage any person, other than the Commonwealth, who had rights as at the date of registration, nor impose any liabilities on such persons in respect of actions taken prior to the TCO’s registration (subsection 269S(1)).
Under the Customs Act 1901, breaches of the conditions set forth for TCOs can result in civil and criminal consequences. Although the explanatory statement does not detail specific offences, it is clear that non-compliance with the provisions for issuing TCOs or any misuse of the concessions granted could potentially lead to penalties. The penalties for contravening the Customs Act 1901 provisions can include substantial fines and, in some cases, imprisonment, depending on the severity of the breach and the specific sections of the Act that are violated. The maximum penalties are not specified in the explanatory statement but generally align with the seriousness of the offence under the broader Customs Act 1901.
The explanatory statement also clarifies that the rights of importers will be beneficially affected by TCO No. 1133798, as they can apply for a refund of duty on goods imported since the TCO’s effective date. This provision ensures that the concessions granted are implemented in a manner that benefits the intended parties while avoiding any unintended disadvantages or liabilities for others. The statement confirms that the TCO does not impose any liabilities on any person, reinforcing the protective measures in place for those affected by the concessions.