EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0604321
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.
Shapemaster Fitness applied for a TCO in respect of certain exercise equipment on 24 February 2006.
Instrument
TCO No 0604321 was made on 5 May 2006. It declares that those certain exercise equipment 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. 0604321 is taken to have come into force on 24 February 2006.
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. 0604321 was enacted in 2006 under the Customs Act 1901. This legislation was introduced to address the need for a streamlined process in granting tariff concessions for specific goods that were not produced in Australia. The primary objective of this instrument is to facilitate the reduction or elimination of customs duty on certain imported goods, thereby making them more accessible and affordable for Australian consumers and businesses. The instrument allows the Chief Executive Officer of Customs to make a Tariff Concession Order (TCO) if an application is made and the core criteria are met, which includes the condition that no substitutable goods are produced in Australia. The instrument aims to benefit importers by potentially allowing them to claim refunds for duties paid on these goods prior to the TCO’s effective date. The instrument was enacted by the relevant legislature, ensuring it adheres to the legislative framework provided by the Customs Act 1901.
Scope and Application
The Tariff Concession Instrument No. 0604321 under the Customs Act 1901 applies to individuals or entities that have applied for and received tariff concession orders concerning specific goods, in this case, exercise equipment. The instrument grants these goods a lower customs duty rate under the Customs Tariff Act 1995, effective from the date the application was lodged. This concession applies nationally and is contingent on the condition that no substitutable goods are produced in Australia at the time the application is made. The CEO of Customs is responsible for evaluating applications and determining whether the core criteria are met, as stipulated in sections 269C and 269F of the Act. Any person considering that a TCO should not be made may lodge a submission with the CEO, although in this instance, no such submissions were received. The instrument also ensures that the rights of persons, other than the Commonwealth, are not adversely affected by the TCO, and it provides for potential refunds of duties paid on the specified goods since the effective date of the concession.
Key Provisions
The Customs Act 1901, as supplemented by the Tariff Concession Instrument No. 0604321, provides a framework through which the Chief Executive Officer (CEO) of Customs can issue Tariff Concession Orders (TCOs) (s 269F). Specifically, s 269C stipulates that a TCO application meets the core criteria if, on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business. Section 269E defines 'ordinary course of business', while s 269D explains 'goods produced in Australia'. If the CEO is satisfied that the application meets these criteria, they must issue a written order declaring that the goods subject to the TCO application are subject to a specified item in Schedule 4 of the Customs Tariff Act 1995 (s 269P(3)). In the case of Shapemaster Fitness, the CEO issued TCO No 0604321 on 5 May 2006, declaring that certain exercise equipment is subject to item 50 of Schedule 4, with a resulting duty rate of 0% instead of the general rate of 5%.
The Act imposes several obligations on the CEO and potentially on applicants for TCOs. Firstly, the CEO must ensure that the application does not pertain to goods specified in s 269SJ, which cannot be subject to a TCO. If the application meets the core criteria outlined in s 269C, the CEO must proceed to make a TCO. Additionally, the CEO must publish a notice in the Gazette inviting any person to lodge submissions if they believe the TCO should not be made (s 269K(1)). For TCO No 0604321, no submissions were received in response to this invitation. The TCO is considered to have come into force on the date the application was lodged, 24 February 2006 (s 269S(1)). Importantly, the TCO does not affect the rights of any person as at the date of registration, nor does it impose any liabilities on any person other than the Commonwealth.
The Customs Act 1901 and the accompanying regulations provide for several potential consequences for breach of the Act’s provisions. While the explanatory statement does not detail specific offences related to TCOs, breaches of the Customs Act generally can result in both civil and criminal penalties. For instance, under the Customs Act, a person can be fined up to $22,200 for contravening an order made under the Act, and up to 25 penalty units ($4,950 as of 2023) for failing to comply with a notice to provide information. In more severe cases, individuals can face imprisonment for up to 5 years, and corporations can be fined up to $277,500 for serious breaches. These penalties underscore the importance of compliance with the Act and its associated regulations.