EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0610217
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.
Nintendo Australia Pty Ltd applied for a TCO in respect of certain hand held video game consoles on 13 June 2006.
Instrument
TCO No 0610217 was made on 1 September 2006. It declares that those certain hand held video game consoles 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. 0610217 is taken to have come into force on 13 June 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. 0610217, enacted under the Customs Act 1901, addresses the issue of providing tariff concessions for certain hand held video game consoles by reducing their customs duty rate to zero percent. This legislative instrument was introduced to provide relief to consumers and businesses in the video gaming sector by making these consoles more affordable, thereby potentially increasing their availability and encouraging technological advancement and consumer engagement in the gaming industry. The instrument was made by the Chief Executive Officer of Customs, following the application from Nintendo Australia Pty Ltd, and was enacted to ensure that the application met the core criteria for tariff concessions, specifically that no substitutable goods were produced in Australia at the time of application. The policy objective aligns with fostering competitive markets and supporting industries that contribute significantly to the economy.
The Customs Act 1901, as amended, allows for the establishment of Tariff Concession Orders (TCOs) which reduce the customs duty on certain goods, provided they meet specific criteria. This mechanism is designed to stimulate economic activity by reducing the cost of imported goods, thereby encouraging their consumption and use within Australia. The Tariff Concession Instrument No. 0610217 specifically targets hand held video game consoles by applying a zero percent duty rate, which was effective from the date the application was lodged, 13 June 2006. The implementation of this tariff concession is expected to benefit consumers by making these consoles more affordable and supporting the gaming industry's growth in Australia.
Scope and Application
The Tariff Concession Instrument No. 0610217 is a legislative instrument made under the Customs Act 1901, providing specific tariff concessions for certain handheld video game consoles. This instrument applies to Nintendo Australia Pty Ltd, the entity that applied for the tariff concession, and to the goods specified in the instrument, namely certain handheld video game consoles. The geographic and jurisdictional reach of this Act is federal, as it pertains to the Commonwealth of Australia. The Act does not specify any exclusions or exemptions, but it does establish a threshold in the form of core criteria that must be met for a tariff concession to be granted. This includes the requirement that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. If the Chief Executive Officer of Customs is satisfied that these criteria are met, the CEO must make a written order declaring that the specified goods are subject to a lower rate of customs duty. The instrument does not extend or restrict its application through subordinate instruments. The process involves consultation, as the CEO must publish a notice in the Gazette inviting submissions from any person who believes the tariff concession should not be made; however, in this case, no submissions were received.
Key Provisions
The Customs Act 1901, specifically within Part XVA, establishes a framework for Tariff Concession Orders (TCOs) which can be applied for and granted by the Chief Executive Officer (CEO) of Customs (section 269F). An applicant, such as Nintendo Australia Pty Ltd in this case, can seek a TCO for certain goods, provided these goods do not fall under the categories specified in section 269SJ, which are ineligible for TCOs. The CEO must assess if the application meets the core criteria, which include the condition that no substitutable goods are produced in Australia in the ordinary course of business (sections 269C and 269S). Once the CEO is satisfied that the application meets these criteria, a TCO must be issued, specifying the goods and the reduced rate of customs duty, which in the case of the handheld video game consoles in question is 0% instead of the general rate of 5% (section 269P(3)).
The obligations imposed by the Customs Act on the CEO include ensuring that TCO applications are assessed against the core criteria and, if met, that a TCO is issued. The CEO must also publish a notice in the Gazette inviting any interested party to submit objections if they believe the TCO should not be granted (subsection 269K(1)). In this instance, no objections were received, and the TCO was issued as Tariff Concession Order No. 0610217 on 1 September 2006. Additionally, the Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the issuance of a TCO, and that no new liabilities are imposed on them (subsection 269S(1)).
For those subject to the Customs Act, compliance involves ensuring that any applications for TCOs meet the eligibility criteria and provide all necessary information for the CEO to make an informed decision. The CEO’s role is to evaluate applications rigorously, publish notices in the Gazette, and consider any submissions received. Failure to comply with these obligations can have legal repercussions, although specific civil or criminal penalties for non-compliance are not detailed in the Act.
In terms of potential breaches, the Act does not explicitly state specific offences, penalties, or civil/criminal consequences for failing to comply with the requirements set out in the TCO or for submitting a false application. However, general provisions in the Customs Act 1901 may apply, where non-compliance could result in penalties for offences related to customs duty evasion, fraud, or misrepresentation. The maximum penalties for such offences can vary significantly but may include substantial fines or imprisonment, depending on the severity of the breach.