EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702121
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 Reject Shop (Aust.) Pty Ltd applied for a TCO in respect of certain insulated lunch boxes on 09 February 2007.
Instrument
TCO No 0702121 was made on 04 May 2007. It declares that those certain insulated lunch boxes 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. 0702121 is taken to have come into force on 09 February 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, enacted by the Australian Parliament, provides a framework for the administration of customs and excise duties. Specifically, Part XVA of the Act introduces a scheme whereby Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. These orders allow for a lower rate of customs duty on certain goods, provided that specific criteria are met. The policy objective of this scheme is to facilitate the importation of goods that are not produced domestically, thereby supporting market access and potentially reducing costs for consumers. Tariff Concession Instrument No. 0702121, issued on 4 May 2007, is an example of this process in action, where insulated lunch boxes were granted a tariff concession after it was determined that no substitutable goods were being produced in Australia, thus meeting the core criteria set out in the Act.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO), aimed at providing lower rates of customs duty on certain goods. This Act applies to any person or entity seeking a TCO for goods that are not specified in section 269SJ of the Act as ineligible for such concessions. The process involves the CEO evaluating whether an application for a TCO meets the core criteria, particularly focusing on whether substitutable goods are produced in Australia. If the CEO determines that no substitutable goods are produced in Australia and that the application meets these criteria, a TCO is issued, applying a reduced duty rate on the specified goods. For instance, the TCO No. 0702121 granted to The Reject Shop (Aust.) Pty Ltd on certain insulated lunch boxes resulted in a zero duty rate on these goods. The application of TCOs is governed by national legislation, with the CEO’s decisions impacting importers by potentially allowing them to apply for refunds on duties paid before the TCO's effective date. The Act ensures that the TCOs do not disadvantage or impose liabilities on any person other than the Commonwealth.
Key Provisions
The Tariff Concession Instrument No. 0702121, made under the Customs Act 1901, specifically addresses the application of a Tariff Concession Order (TCO) for certain insulated lunch boxes. According to section 269F of the Act, an individual may apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. The CEO must consider the application, ensuring it does not pertain to goods specified in section 269SJ, which lists those ineligible for TCOs. If the application meets the core criteria outlined in section 269C, which requires that no substitutable goods were produced in Australia on the day the application was lodged, the CEO must issue a written TCO. Section 269P(3) further mandates that the TCO declare the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies.
Under this Act, the CEO has the obligation to assess whether an application for a TCO meets the core criteria, as defined in section 269C. The CEO must also ensure that the application is not in respect of goods specified in section 269SJ and must publish a notice in the Gazette inviting any interested party to submit objections if they believe the TCO should not be made. In this particular case, the CEO did not receive any submissions opposing the TCO. Furthermore, the CEO must consider the meaning of terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods," as defined in sections 269D, 269E, and 269F of the Act respectively.
The Act also delineates the consequences for non-compliance. Although the Explanatory Statement does not specify any particular offences or penalties for breaching the Act, it is understood that failure to comply with the terms of the TCO could lead to legal repercussions. The penalties for such breaches could include financial penalties, confiscation of goods, or other civil or criminal sanctions as prescribed by the Act. However, the precise nature and extent of these penalties are not detailed in the provided text.
In summary, the Tariff Concession Instrument No. 0702121 enables the application of a lower customs duty rate for certain insulated lunch boxes, provided the CEO is satisfied that the application meets the statutory criteria and no objections are raised. The CEO's role is to assess the application's eligibility, ensure it complies with the Act's provisions, and publish notices inviting public submissions. The rights of importers will be positively affected, as they can apply for a refund of duty on imported goods since the TCO came into force. Any breach of the Act's provisions could result in legal consequences, although the specific penalties are not detailed in the provided text.