EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0507312
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.
M L Watersports Pty Ltd applied for a TCO in respect of certain watersport equipment on 14 June 2005.
Instrument
TCO No 0507312 was made on 21 October 2005. It declares that the certain watersport equipment is a commodity 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. 0507312 is taken to have come into force on 14 June 2005.
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 enacted to regulate the import and export of goods within Australia and to collect customs duty on imported goods. In 2005, Tariff Concession Instrument No. 0507312 was introduced to provide relief from customs duty for specific goods, addressing the need for tariff concessions that could support economic activities by reducing the cost burden on certain imports. This instrument was enacted by the Parliament of Australia with the aim of facilitating trade by lowering duty rates for specified goods, thereby enhancing their competitiveness in the domestic market without imposing additional liabilities on individuals or entities other than the Commonwealth. The Tariff Concession Order (TCO) No. 0507312, made by the Chief Executive Officer of Customs, applies to certain watersport equipment, reducing the duty rate from the general rate of 5% to free, effective from the date of the application, 14 June 2005.
Scope and Application
The Customs Act 1901, specifically through Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), with the aim of applying a lower rate of customs duty to specified goods. This mechanism is designed to benefit certain entities or individuals, such as M L Watersports Pty Ltd, by reducing the duty on goods that are not produced in Australia in the ordinary course of business. The application process for a TCO requires meeting core criteria, such as the absence of substitutable goods produced domestically, and involves a public notice period for objections, though in the case of TCO No. 0507312, no objections were received. This legislation applies nationally, governed by the Commonwealth, and its implementation through TCOs can be further defined or extended by subordinate instruments such as regulations. It is important to note that the TCO does not affect pre-existing rights or impose new liabilities on any party other than the Commonwealth, thereby ensuring that the rights of importers are positively impacted, potentially through duty refunds for imports made since the TCO's effective date.
Key Provisions
The Customs Act 1901 (the Act) contains provisions for the creation of Tariff Concession Orders (TCOs), which can reduce the rate of customs duty on certain goods. Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which lists those goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria (section 269C), they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively applying a lower rate of duty.
Entities applying for a TCO, such as M L Watersports Pty Ltd, must ensure that their application complies with the core criteria outlined in the Act. Specifically, they must demonstrate that no substitutable goods were produced in Australia on the day the application was lodged. This includes ensuring that the definition of ‘substitutable goods’ as per section 269D, and ‘ordinary course of business’ as per section 269E, aligns with the application. Once the CEO is satisfied with the application, they must issue a TCO, which in the case of M L Watersports Pty Ltd, resulted in certain watersport equipment being subject to a free rate of duty, down from the general rate of 5%.
The obligations imposed by the Act require the CEO to publish a notice in the Gazette inviting submissions if they accept a TCO application as valid. This notice must be published as soon as practicable after the application is accepted. In this case, the CEO did not receive any submissions, which suggests that there was no opposition to the TCO. The TCO comes into force on the day the application is lodged, which in this instance was 14 June 2005. Importantly, the TCO does not affect the rights of any person as at the date of registration and does not impose any new liabilities on any person, although it does provide potential benefits to importers who can apply for a refund of duty on goods imported since the TCO came into force.
Any breach of the requirements or obligations under the Customs Act 1901 may result in various consequences. The Act does not explicitly state specific offences or penalties for failing to comply with TCO provisions, but general penalties for breaches of the Customs Act can include fines and imprisonment. The specific penalties depend on the nature and severity of the breach, but they can be significant, reflecting the importance of compliance with customs regulations. The Act mandates strict adherence to the procedures and criteria outlined, and any deviation can lead to enforcement actions by the relevant authorities.