EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0508911
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.
Surf Hardware International Pty Ltd applied for a TCO in respect of certain Surfboard Accessories on 11 July 2005.
Instrument
TCO No 0508911 was made on 23 September 2005. It declares that those certain Surfboard Accessories 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 0%.
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. 0508911 is taken to have come into force on 11 July 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, enacted by the Australian Parliament, provides a framework for the imposition of customs duties on imported goods. To address the need for tariff concessions, Part XVA of the Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that apply lower rates of customs duty to certain goods. The Tariff Concession Instrument No. 0508911, made under the authority of the Customs Act 1901, was introduced to provide a tariff concession for certain Surfboard Accessories, reducing the duty from the general rate of 5% to 0%. This concession was granted after Surf Hardware International Pty Ltd applied for it on 11 July 2005, and the CEO determined that no substitutable goods were produced in Australia. The instrument came into force on the same date the application was lodged, and no submissions were received in opposition to the concession. The policy objective is to facilitate trade by reducing the cost of importing specified goods, thereby benefiting importers who can apply for duty refunds on imports made since the effective date of the concession.
Scope and Application
The Customs Act 1901 provides a mechanism for the application of tariff concessions, where a lower rate of customs duty is applied to goods specified in a Tariff Concession Order (TCO). These orders are made by the Chief Executive Officer of Customs (CEO) upon application and are subject to certain criteria under the Act, including the absence of substitutable goods produced in Australia in the ordinary course of business. The application process requires the CEO to publish a notice in the Gazette inviting submissions from any interested parties, although no submissions were received for TCO No. 0508911. The TCO applies to specific goods, such as surfboard accessories, and modifies their duty rate from the general 5% to 0% as per the specified item in the Customs Tariff Act 1995. The TCO does not retroactively affect the rights of any person or impose new liabilities, but does allow for the potential refund of duties for importers of the affected goods since the date the TCO is deemed to have come into force.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0508911, made under the Customs Act 1901, include sections 269C, 269B, 269D, 269E, and 269F. Section 269C outlines the criteria that an application for a Tariff Concession Order (TCO) must meet. Specifically, for an application to be valid, it must be the case that, on the day the application is lodged, no substitutable goods are being produced in Australia in the ordinary course of business (section 269C). Definitions for key terms such as "goods produced in Australia" (section 269D), "ordinary course of business" (section 269E), and "substitutable goods" (section 269B) are also provided in the Act. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. If the CEO determines that the application meets the core criteria, they must issue a written order (section 269P(3)).
The obligations and requirements imposed by this legislation on the parties it governs are primarily on the CEO. When an application for a TCO is received, the CEO must first verify that the application is valid and not in respect of goods specified in section 269SJ of the Act. If the application is valid, the CEO must then determine whether the application meets the core criteria by checking if no substitutable goods are being produced in Australia. If the criteria are met, the CEO must issue a written TCO. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit any reasons why the TCO should not be made. In this case, no submissions were received.
The Customs Act 1901 and associated regulations do not explicitly state offences, penalties, or civil/criminal consequences for breaches of the TCO provisions. However, non-compliance with the terms of a TCO could potentially lead to legal challenges or administrative actions, given that the TCO affects the duty rates applicable to specific goods. For example, if a person knowingly imports goods subject to a TCO without taking advantage of the reduced duty rate, they might face scrutiny or penalties under other sections of the Customs Act or associated regulations, although these are not detailed in the provided explanatory statement. The general rate of duty on the specified Surfboard Accessories is 5%, while the rate for those subject to the TCO is 0%.