EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1134135
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.
Masterpets Australia Pty Ltd applied for a TCO in respect of certain pet beds on 11 October 2011.
Instrument
TCO No 1134135 was made on 04 January 2012. It declares that those certain pet beds 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. 1134135 is taken to have come into force on 11 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 was amended to introduce Tariff Concession Orders (TCOs) under Part XVA, aiming to provide a mechanism for reducing customs duty rates on certain goods. The Act empowers the Chief Executive Officer of Customs to grant these concessions, provided the application meets specific criteria, such as the absence of substitutable goods produced in Australia. Masterpets Australia Pty Ltd sought a TCO for specific pet beds, which was granted on 4 January 2012, resulting in a duty rate of free instead of the general 5%. This concession was effective from the date the application was lodged, 11 October 2011, and no submissions were received in opposition to the TCO. The policy objective behind this concession is to facilitate the import of goods that are not locally produced, thereby potentially benefiting consumers by lowering the cost of these imported goods.
Scope and Application
The Tariff Concession Instrument No. 1134135 applies to the concession of customs duty on certain pet beds as requested by Masterpets Australia Pty Ltd. This concession is pursuant to the Customs Act 1901, which governs the import and export of goods in Australia. Specifically, the instrument pertains to goods that are subject to a Tariff Concession Order (TCO), which is issued by the Chief Executive Officer of Customs (CEO) when the application meets the core criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. The instrument is effective from the date the TCO application was lodged, 11 October 2011, and has no retroactive effect on pre-existing transactions or liabilities, thereby protecting the rights of individuals other than the Commonwealth. The CEO is mandated to publish a notice in the Gazette inviting submissions on the TCO application, although none were received in this instance. This instrument extends the application of the Customs Act 1901 through subordinate legislation, facilitating the reduction of customs duties on specified goods.
Key Provisions
The main operative sections of the Customs Act 1901, particularly as applied in Tariff Concession Order (TCO) No. 1134135, focus on the process by which tariff concessions can be granted for specific goods. Section 269F allows for an application to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods do not fall under the list specified in section 269SJ, which excludes certain types of goods from such concessions. Section 269C outlines the core criteria that must be met for an application to be considered, including the requirement that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied with the application, a written order must be made declaring the goods eligible for the tariff concession specified in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on parties and entities primarily revolve around the application and assessment process for TCOs. The CEO must ensure that any application for a TCO does not pertain to goods listed in section 269SJ and must verify that the core criteria specified in section 269C are met. This involves confirming that no substitutable goods were produced in Australia on the day the application was lodged. The CEO is also obligated to publish a notice in the Gazette inviting any interested parties to submit objections to the TCO if they believe it should not be granted, as outlined in subsection 269K(1). Once a TCO is made, the CEO must ensure that it does not disadvantage any person or impose liabilities on any person in respect of actions taken before the TCO was registered, as per subsection 269S(1).
The Act also delineates the consequences for non-compliance or breach of its provisions. While specific offences and penalties are not detailed in the explanatory statement, breaches of the Customs Act 1901, in general, can result in both civil and criminal penalties. Civil penalties can include fines, and in some cases, criminal penalties can be imposed, which may involve imprisonment. The maximum penalties can vary depending on the severity and nature of the breach, but they are intended to enforce compliance with the Act’s provisions, ensuring the proper administration of customs duties and tariff concessions.