EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1137493
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 bags on 10 November 2011.
Instrument
TCO No 1137493 was made on 01 February 2012. It declares that those certain 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. 1137493 is taken to have come into force on 10 November 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, provides a framework for the regulation of customs and excise, including the administration of tariffs and the facilitation of international trade. The Act introduced a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs to reduce the rate of customs duty on certain goods. This was introduced to address the gap in providing tariff concessions for specific goods where no substitutable goods are produced in Australia. The policy objective behind this is to encourage the importation of goods that are not domestically produced, thereby supporting competition and consumer choice. In line with this objective, McPherson's Consumer Products successfully applied for a TCO for certain bags, resulting in Instrument TCO No. 1137493, which was published in the Gazette and came into effect on 10 November 2011. The TCO provides a zero-rate duty on these bags, which were previously subject to a 5% duty rate, benefiting importers and consumers alike.
Scope and Application
The Tariff Concession Order No. 1137493 under the Customs Act 1901 applies specifically to goods that are the subject of the order, which in this case are certain bags. The Act allows for the Chief Executive Officer of Customs to grant tariff concessions for goods if certain conditions are met, primarily that no substitutable goods are produced in Australia. The order is applicable to the goods specified in the application by McPherson's Consumer Products, which were taken to have come into force on the date the application was lodged, 10 November 2011. The concession affects the customs duty rates for these goods, reducing the general rate of 5% to free duty. The order does not extend to goods specified in section 269SJ of the Act that cannot be subject to a TCO. Additionally, the rights of importers are positively impacted as they can apply for a refund of duty on goods imported since the effective date of the concession. The order does not disadvantage any person other than the Commonwealth or impose any liabilities on individuals or entities except the Commonwealth, for actions taken prior to the concession's registration date.
Key Provisions
The main operative sections of this legislation pertain to Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C outlines the core criteria that a TCO application must meet, which is essentially that no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO) specifying the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
Under the Customs Act 1901, the CEO of Customs has the obligation to assess whether an application for a TCO meets the core criteria as specified in section 269C. If the application is valid and meets these criteria, the CEO must proceed to make a TCO. Furthermore, as per subsection 269K(1), the CEO is required to publish a notice in the Gazette inviting any person who believes there are reasons why the TCO should not be made to lodge a submission with the CEO. Additionally, the TCO must be taken to have come into force on the day the application was lodged, as per subsection 269S(1).
For breaches of the provisions set out in this legislation, the Customs Act 1901 imposes potential civil and criminal consequences. The Act does not explicitly state penalties for non-compliance with the TCO provisions, but general provisions in the Customs Act 1901 outline potential civil penalties for breaches, which may include fines and imprisonment. The exact penalties depend on the nature and severity of the breach, as determined under the broader customs laws. Any person who fails to comply with the TCO requirements may also face liability for any resulting duty owed on the goods in question.