EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702674
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.
Ditcom Industries Pty Ltd applied for a TCO in respect of certain redemption tickets on 20 February 2007.
Instrument
TCO No 0702674 was made on 11 May 2007. It declares that those certain redemption tickets 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. 0702674 is taken to have come into force on 20 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 Tariff Concession Instrument No. 0702674 was enacted in 2007 under the Customs Act 1901 to provide relief on customs duty for certain goods that are not produced domestically and have no suitable substitutes. This legislative instrument was introduced to address the problem of high import duties on goods that are not manufactured locally and to promote the import of such goods by reducing their cost. The instrument was created by the Chief Executive Officer of Customs, following an application by Ditcom Industries Pty Ltd for tariff concessions on specific redemption tickets. The policy objective is to ensure that the application of tariff concessions does not disadvantage existing rights and liabilities, while providing benefits to importers of the affected goods.
The instrument was made on 11 May 2007, and it is effective as of the date of the application, 20 February 2007. The Customs Act 1901 requires that the CEO must publish a notice in the Gazette inviting submissions from interested parties before making a decision on a tariff concession application. In this case, no submissions were received, and the CEO was satisfied that the application met the core criteria, which is that no substitutable goods were produced in Australia. Consequently, the CEO made a written order declaring that the specified redemption tickets are subject to a free rate of duty, down from the general rate of 5%. The instrument ensures that no existing rights or liabilities are adversely affected, and it allows importers to apply for a refund of duty on the affected goods.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This scheme allows for reduced rates of customs duty on goods that are the subject of a TCO, with the process initiated by an application from a person to the CEO. The application is subject to core criteria, specifically outlined in section 269C, which requires that no substitutable goods are produced in Australia in the ordinary course of business on the day the application was lodged. The CEO is also bound by section 269SJ, which lists goods that cannot be subject to a TCO. If the CEO is satisfied with the application, they must make a TCO, as stipulated in section 269P(3), which declares the goods to which a specific item in Schedule 4 of the Customs Tariff Act 1995 applies. The CEO is required to consult by publishing a notice in the Gazette, inviting submissions on the proposed TCO, although in this instance, no submissions were received. The TCO comes into force on the day the application was lodged, as per section 269S(1), and while it affects the rights of importers beneficially by allowing duty refunds on imports since the TCO's effective date, it does not impose liabilities on any person.
Key Provisions
The main operative sections of this legislation (F2007L01436) include section 269C, which outlines the core criteria for a Tariff Concession Order (TCO) application. For a TCO to be considered, it must be established that no substitutable goods were produced in Australia on the day the application was lodged (section 269C). This definition includes the terms 'goods produced in Australia' (section 269D), 'ordinary course of business' (section 269E), and 'substitutable goods' (section 269F). If these criteria are met, the Chief Executive Officer (CEO) of Customs must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In this instance, the redemption tickets in question are subject to item 50 of Schedule 4, resulting in a duty-free rate.
The Act imposes certain obligations and requirements on the parties involved. The CEO must ensure that the application meets the core criteria before issuing a TCO. Ditcom Industries Pty Ltd, the applicant, must ensure that their application adheres to the conditions outlined in the Act, including the absence of substitutable goods produced in Australia on the application date. Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who considers that there are reasons why the TCO should not be made (subsection 269K(1)). Although no submissions were received in this case, the CEO is obligated to consider any submissions received in future applications.
The Act provides for certain civil or criminal consequences for breaches of its provisions. While the explanatory statement does not explicitly outline these penalties, under the Customs Act 1901, breaches can result in penalties for individuals and entities. These penalties can include fines and, in some cases, imprisonment. The specific penalties are determined by the nature and severity of the breach. It is essential for parties to adhere to the requirements and obligations outlined in the Act to avoid potential penalties and legal consequences.