EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0701549
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.
Modern Teaching Aids Pty Ltd applied for a TCO in respect of certain plastic human form figurines on 29 January 2007.
Instrument
TCO No 0701549 was made on 20 April 2007. It declares that those certain plastic human form figurines 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. 0701549 is taken to have come into force on 29 January 2007.
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 was amended to introduce a scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs. This scheme was enacted to address the need for a mechanism to provide tariff concessions for certain goods, ensuring that lower rates of customs duty could be applied where appropriate. The policy objective was to streamline the process for reducing customs duties on specific goods, thereby facilitating trade and economic efficiency. The Parliament introduced this legislative change to provide flexibility in the application of customs duties, ensuring that the Australian market could benefit from reduced costs for particular imported goods without substantial bureaucratic hurdles. The explanatory statement details the application process, criteria for TCOs, and the effect of such orders on both the government and importers.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the process through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). This legislation applies to any person or entity that seeks a lower rate of customs duty for goods not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO. The Act applies to industries and transactions involving the importation of goods that are not produced in Australia and for which no substitutable goods are available domestically. The geographic reach of the Act is national, as it pertains to the Commonwealth of Australia. The Act allows the CEO to make a TCO if the application meets core criteria, primarily that no substitutable goods were produced in Australia on the day the application was lodged. This decision is subject to the definitions provided in the Act for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." The TCO is effective from the date the application was lodged, and it does not retroactively disadvantage any person or impose liabilities on them for actions taken before the TCO’s registration. Additionally, the Act enables the CEO to extend or restrict the application of a TCO through subordinate instruments, facilitating flexibility in its implementation.
Key Provisions
The primary sections of this legislation, Tariff Concession Instrument No. 0701549, establish a framework for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) under section 269F of the Customs Act 1901 (the Act). Section 269C of the Act stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. To be considered substitutable, goods must be produced in Australia and capable of being used in the same way as the goods for which the TCO is being sought. If the CEO determines that the application meets these criteria, a TCO is issued, as outlined in section 269P(3), which specifies the reduced customs duty rate for the designated goods. For the plastic human form figurines in this case, item 50 of Schedule 4 to the Tariff applies, reducing the duty from 5% to free.
Under the Customs Act 1901, the CEO has specific obligations when processing a TCO application. First, the CEO must ensure that the application is not for goods specified in section 269SJ, which are ineligible for TCOs. Once an application is deemed valid, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not proceed, as required by subsection 269K(1). If no submissions are received, the CEO must proceed to make the TCO if the application meets the core criteria under section 269C. Additionally, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO's registration date, as per subsection 269S(1). The rights of importers are protected, allowing them to apply for duty refunds on goods imported since the TCO's effective date, as outlined in paragraph 126(1)(r) of the Regulations.
The Customs Act 1901 imposes certain consequences for breaches related to the issuance or misuse of TCOs. Offences under the Act may lead to both civil and criminal penalties. For instance, knowingly providing false or misleading information in a TCO application could result in fines or imprisonment, as stipulated in section 269X of the Act. The exact penalties would depend on the severity and intent behind the breach. Additionally, if any party misuses the TCO by improperly claiming tariff concessions, they could face financial penalties or legal action. The Act does not specify maximum penalties in the explanatory statement, but it is understood that severe breaches could attract significant fines or imprisonment terms, in line with other sections of the Act.