EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0515404
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.
Frost Promotions Pty Ltd applied for a TCO in respect of certain soft sided insulated cooler bags on 07 November 2005.
Instrument
TCO No 0515404 was made on 06 February 2006. It declares that those certain soft sided insulated cooler 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. 0515404 is taken to have come into force on 07 November 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 Parliament of Australia, provides a framework for tariff concession orders that aim to alleviate the financial burden of customs duty on specific imported goods by granting lower duty rates. This Act, particularly through Part XVA, addresses the gap in providing relief to importers of goods that are not produced in Australia and where there are no substitutable goods available domestically. The Act allows the Chief Executive Officer of Customs to grant these concessions if certain conditions, such as the absence of Australian production of substitutable goods, are met. The policy objective is to support import activities and potentially stimulate economic activity by making certain imported goods more competitively priced in the Australian market. The Tariff Concession Instrument No. 0515404, introduced under this framework, exemplifies the application of these provisions to provide a tariff concession on certain soft sided insulated cooler bags, resulting in a reduced duty rate from 5% to free, effective from the date of the application.
Scope and Application
The Tariff Concession Instrument No. 0515404 under the Customs Act 1901 applies to individuals or entities seeking tariff concessions for specified goods, namely certain soft-sided insulated cooler bags, which have been determined to not have Australian-produced substitutes. This instrument pertains specifically to the customs duty applied to these goods, effectively reducing the duty from the general rate to free of charge for those applying for and qualifying under the Tariff Concession Order. The application of this legislation is Commonwealth-wide, with the instrument taking effect on the date the application was lodged, which was 07 November 2005, as per the Act's provisions. It does not affect any pre-existing rights of persons or impose liabilities on them for actions taken before the registration of the instrument. The application process and the eventual decision-making by the Chief Executive Officer of Customs involve a public consultation process where objections can be lodged, although in this case, no objections were received. The scope of this instrument can be further defined or modified through subordinate instruments as authorised by the Customs Act 1901.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0515404 are primarily found within Part XVA of the Customs Act 1901 (the Act). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO). Section 269C sets out the core criteria for the CEO to determine whether an application for a TCO meets the necessary requirements, with a crucial condition being 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 these criteria, they must make a written order (a TCO) applying a prescribed rate of customs duty.
The Act imposes several obligations on the parties involved in the TCO process. The CEO must ensure that any TCO application does not relate to goods specified in section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. Furthermore, the CEO must assess whether the application meets the core criteria as specified in section 269C. Additionally, under section 269K(1), the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made. In this instance, the CEO did not receive any submissions in response to this invitation.
Failing to comply with the requirements set out in the Customs Act 1901 can lead to various consequences. The Act does not specify particular offences or penalties for non-compliance with the TCO process itself, but general non-compliance with customs regulations can result in significant penalties. These can include fines, imprisonment, or both, depending on the severity of the breach. For instance, under section 236 of the Customs Act 1901, contravening provisions of the Act can lead to fines of up to 10,000 penalty units or imprisonment for up to five years, or both. For corporations, the maximum penalty can be higher, reaching up to 50,000 penalty units. Additionally, failure to adhere to the TCO process could lead to the imposition of full customs duty on the goods in question, thereby negating any tariff benefits intended by the concession.