EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0701581
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 cardboard games on 29 January 2007.
Instrument
TCO No 0701581 was made on 11 May 2007. It declares that those certain cardboard games 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. 0701581 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 Tariff Concession Instrument No. 0701581 was enacted in 2007 under the Customs Act 1901, aiming to address the issue of applying lower rates of customs duty to specific goods that meet certain criteria. The Customs Act 1901 provides a framework for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which can reduce the duty on goods if they are not produced domestically and no suitable substitutes exist. Modern Teaching Aids Pty Ltd applied for a TCO for certain cardboard games, which was subsequently granted as no substitutable goods were being produced in Australia at the time. The instrument, which came into force on 29 January 2007, declares that the specified cardboard games are subject to a zero rate of duty, down from the general rate of 5%. The policy objective is to encourage the importation of goods that are not domestically produced and for which no suitable alternative exists, thereby benefiting importers who can now apply for a refund of duty on goods imported since the effective date of the TCO.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), enabling a lower rate of customs duty for specified goods. An individual or entity can apply for a TCO for goods that meet the criteria set out in section 269C of the Act, namely that no substitutable goods are produced in Australia in the ordinary course of business on the day the application is lodged. The CEO must also ensure that the goods in question are not specified in section 269SJ, which outlines goods that cannot be subject to a TCO. Once the CEO is satisfied that the application meets the core criteria, a written order is issued, declaring that the goods are subject to a prescribed tariff concession. This legislation applies to all entities and individuals who import the specified goods, offering them a benefit in the form of reduced customs duty. The scope of the Act is national, as it pertains to the Commonwealth, but its effects are felt in the import transactions involving the specified goods across the country. Subordinate instruments may extend or restrict the application of the Act, but no such extensions or restrictions are mentioned in this particular TCO.
Key Provisions
The Tariff Concession Order (TCO) No. 0701581 under the Customs Act 1901, specifically section 269F, allows for a lower rate of customs duty on certain goods, in this case, certain cardboard games. The order was made by the Chief Executive Officer of Customs (section 269C) following an application by Modern Teaching Aids Pty Ltd on 29 January 2007. The CEO determined that the application met the core criteria, specifically that no substitutable goods were produced in Australia on the day the application was lodged, as per section 269P(3). The TCO declares that these particular cardboard games are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%. The TCO is deemed to have come into effect on the date the application was lodged, 29 January 2007, in accordance with subsection 269S(1).
Entities governed by this Act, including applicants for TCOs, are required to adhere to the conditions and processes outlined in sections 269K(1), 269C, and 269P(3). The CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made, and Modern Teaching Aids Pty Ltd's application did not receive any such submissions. The CEO must also ensure that the application meets the core criteria, which involves verifying that no substitutable goods are produced in Australia on the day the application is lodged. The obligations extend to ensuring that the rights of importers are not adversely affected and that they can apply for a refund of duty on goods imported since the effective date of the TCO, as stipulated under paragraph 126(1)(r) of the Regulations.
Failure to comply with the provisions of the Customs Act 1901, including submitting incorrect information or breaching the terms of a TCO, may result in various consequences. While the explanatory statement does not specify the exact penalties for breach, the Act generally provides for both civil and criminal penalties for non-compliance. These can include fines, imprisonment, or both, depending on the severity and nature of the breach. The exact penalties would be determined by the relevant court and would depend on the specific circumstances of the case. The consequences for breaching the terms of a TCO can include financial penalties, revocation of the TCO, or both, which may further lead to legal action against the defaulting party.