EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616090
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.
The Sunglass Fix applied for a TCO in respect of certain polycarbonate sunglass lenses on 25 August 2006.
Instrument
TCO No 0616090 was made on 17 November 2006. It declares that those certain polycarbonate sunglass lenses 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. 0616090 is taken to have come into force on 25 August 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 Customs Act 1901, enacted by the Australian Parliament, establishes a framework for the application of customs duties on goods imported into Australia. One of its mechanisms, outlined in Part XVA, is the ability to make Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. The primary purpose of these orders is to grant tariff concessions on specific goods, thereby reducing the customs duty applied to them. The Tariff Concession Instrument No. 0616090, introduced in 2006, exemplifies this process by granting a tariff concession on polycarbonate sunglass lenses, reducing their duty rate from 5% to free. The Act aims to ensure that no substitutable goods are produced in Australia before granting such concessions, thereby protecting local industries from unfair competition. This legislative framework allows for efficient tariff management while promoting fair trade practices.
Scope and Application
The Tariff Concession Instrument No. 0616090 applies to specific polycarbonate sunglass lenses, providing them with a lower rate of customs duty under the Customs Act 1901. This concession is granted to entities or individuals importing these goods, effectively reducing the duty rate from the general 5% to free. The geographic reach of this legislation is national, as it pertains to the application and enforcement of the Customs Act 1901 across Australia. The instrument is an extension of the Act, which allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCO) under certain conditions. The Act applies to any person or entity that imports the specified goods, and the concession is contingent on the absence of substitutable goods being produced in Australia in the ordinary course of business. The Act does not impose any liabilities on persons other than the Commonwealth and does not disadvantage existing rights of non-Commonwealth entities as long as those rights pertain to actions before the TCO's effective date.
Key Provisions
The Customs Act 1901, through its Tariff Concession Orders (TCOs) mechanism, allows for a reduction in customs duty on specified goods, provided certain criteria are met (section 269F). When an application is made under section 269F, the Chief Executive Officer of Customs (CEO) is tasked with determining whether the application meets the core criteria, primarily whether no substitutable goods were produced in Australia at the time of application (section 269C). If these criteria are satisfied, the CEO must issue a written TCO (section 269P(3)). This process was exemplified by the TCO No. 0616090 for certain polycarbonate sunglass lenses, which applied a zero duty rate instead of the general 5% duty (Schedule 4, item 50).
Under this Act, the CEO has a duty to consult with relevant stakeholders when considering a TCO application. This consultation involves publishing a notice in the Gazette, inviting any interested parties to submit objections or support (subsection 269K(1)). In the case of TCO No. 0616090, no submissions were received, indicating broad acceptance or lack of opposition to the application. The TCO's effective date is set as the day the application was lodged (subsection 269S(1)), which for TCO No. 0616090, was 25 August 2006. This commencement date ensures that the concession applies retroactively from the moment the application was submitted.
The TCO mechanism also includes provisions to protect the rights of third parties. Specifically, it is designed not to disadvantage any person other than the Commonwealth or impose liabilities for actions taken before the TCO's registration (subsection 269S(2)). This means that while the rights of importers are positively affected by the duty reduction, no one is adversely affected by the TCO in terms of pre-existing rights or obligations. Importers can further benefit by applying for a refund of any duties paid on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
The Customs Act 1901 also delineates the consequences of breaching its provisions. While the explanatory statement does not detail specific offences or penalties, it is reasonable to infer that breaches of the Act, including non-compliance with TCOs, could lead to legal action. The penalties for such breaches can vary widely depending on the nature and severity of the offence but could include fines, imprisonment, or both. For example, under the Customs Act, offences involving false statements or fraudulent activities can result in substantial fines and imprisonment terms, which may be further compounded by the specific provisions of the TCO and associated regulations.