EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0510723
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.
Global Shop Direct applied for a TCO in respect of certain Kitchen Knives Sets on 15 August 2005.
Instrument
TCO No 0510723 was made on 28 October 2005. It declares that those certain Kitchen Knives 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 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. 0510723 is taken to have come into force on 15 August 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 Tariff Concession Instrument No. 0510723, enacted in 2005 under the Customs Act 1901, addresses the need to provide tariff concessions for specific goods that are not produced in Australia, thereby encouraging their importation and potentially supporting domestic industries by reducing the cost of essential goods. The Customs Act 1901 established the framework for Tariff Concession Orders (TCOs), which allow for reduced customs duties on certain goods, provided that these goods are not already produced in Australia and their importation would not substitute for local production. The policy objective behind the Act is to facilitate the import of goods that are not domestically produced, thus benefiting consumers and potentially aiding industries that require these imports for their operations. The instrument was enacted by the Chief Executive Officer of Customs following an application by Global Shop Direct for tariff concessions on Kitchen Knives Sets, leading to a reduction in the duty rate from 5% to 0%.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which provide for a lower rate of customs duty on specific goods. An application for a TCO may be submitted by any person, provided the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO must assess whether the application meets the core criteria outlined in section 269C of the Act, which requires that no substitutable goods are produced in Australia in the ordinary course of business as of the day the application was lodged. If the application satisfies these criteria, a TCO is issued, reducing the duty rate on the specified goods. The geographic scope of this Act is national, applying across Australia, and its reach is extended through the subordinate Customs Tariff Act 1995. The Act does not disadvantage any person’s rights as they stood on the date of registration, nor does it impose any liabilities on individuals for actions taken prior to the registration of a TCO. The TCOs can be further refined or expanded through subordinate instruments, ensuring flexibility in their application and enforcement.
Key Provisions
The primary sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCOs) include sections 269F, 269C, 269B, and 269P, which detail the application process, core criteria for eligibility, definitions, and the making of TCOs. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of certain goods. The CEO must then determine whether the application meets the core criteria outlined in sections 269C and 269B. These sections define key terms such as "substitutable goods," "goods produced in Australia," and "ordinary course of business." If the application meets these criteria, the CEO must issue a TCO as per section 269P(3).
The Customs Act 1901 imposes several obligations on both the CEO and applicants for TCOs. The CEO must ensure that any application for a TCO is assessed against the core criteria specified in section 269C and must consider whether substitutable goods are being produced in Australia as per section 269B. The CEO must also publish a notice in the Gazette inviting public submissions regarding the proposed TCO, as required by section 269K(1). Applicants, on the other hand, must provide all necessary information and evidence to support their application and must ensure that the goods in question do not fall under the exclusions listed in section 269SJ.
Failure to comply with the provisions of the Customs Act 1901 regarding TCOs can result in various penalties and consequences. While the Act does not explicitly outline specific criminal or civil penalties for breaches related to TCOs, non-compliance with customs regulations generally can lead to fines, imprisonment, or both. For instance, making a false or misleading statement in an application could potentially attract penalties under other sections of the Customs Act, such as section 246, which pertains to false statements. The maximum penalties can vary depending on the severity of the breach, but they can include substantial fines and/or imprisonment.