EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702890
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.
Coleman Brands Pty Limited applied for a TCO in respect of certain air pumps on 23 February 2007.
Instrument
TCO No 0702890 was made on 18 May 2007. It declares that those certain air pumps 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. 0702890 is taken to have come into force on 23 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 was enacted by the Australian Parliament to provide a comprehensive framework for the regulation of customs and excise duties. The Tariff Concession Instrument No. 0702890, issued in 2007, is a specific instrument under the Customs Act designed to address the gap in tariff concessions for particular goods. The instrument was introduced to provide tariff concessions for certain air pumps, ensuring that these goods were subject to a lower rate of customs duty, specifically free of duty as opposed to the general rate of 5%. The instrument was created following an application by Coleman Brands Pty Limited and subsequent satisfaction by the Chief Executive Officer of Customs that no substitutable goods were produced in Australia, thus meeting the core criteria for tariff concessions. The policy objective was to facilitate the importation of these goods without imposing additional financial burdens on importers, thereby supporting trade and economic activity.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for Tariff Concession Orders (TCOs) which allow for reduced customs duties on certain goods. These orders are made by the Chief Executive Officer of Customs (CEO) upon application and subsequent satisfaction of core criteria as outlined in section 269C of the Act. The application process is open to any person, provided the goods in question are not those specified in section 269SJ, which are ineligible for tariff concessions. The CEO must also be convinced that no substitutable goods, meaning goods produced in Australia that can serve a similar use to the imported goods, are manufactured domestically, as defined by sections 269D and 269E of the Act. The scope of the Act applies nationally across Australia, as it is a Commonwealth legislation. The application and subsequent TCO do not retroactively affect the rights of any person, ensuring that only future transactions involving the specified goods are subject to the altered tariff rates. The TCO in question, Instrument TCO No 0702890, was issued on 18 May 2007, and it applies to certain air pumps, providing them with a duty-free status under item 50 of Schedule 4 to the Customs Tariff Act 1995.
Key Provisions
The main operative sections of the Customs Act 1901, as referenced in Tariff Concession Instrument No. 0702890, include sections 269C, 269D, 269E, 269F, 269K, 269P, 269S, and 269SJ (sections 269C, 269D, 269E, 269F, 269K, 269P, 269S, and 269SJ). Section 269F (section 269F) allows for the application to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods, while section 269C (section 269C) provides the criteria that the application must meet, including that no substitutable goods were produced in Australia on the day the application was lodged. Section 269K (section 269K) requires the CEO to publish a notice in the Gazette inviting submissions on the application, and section 269P (section 269P) mandates that if the CEO is satisfied the application meets the criteria, a written order must be made. Section 269S (section 269S) states that the TCO comes into force on the day the application was lodged.
The Act imposes several obligations on the parties involved. The CEO is required to assess the validity of the TCO application and determine if it meets the core criteria (section 269C, section 269F). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (section 269K). Importers and other entities must ensure that any goods subject to a TCO are accurately classified and comply with the terms of the order to benefit from the reduced duty rates.
Failure to comply with the requirements of the Customs Act 1901 or Tariff Concession Instrument No. 0702890 can result in civil or criminal penalties. Under section 188 of the Customs Act, persons who knowingly make a false or misleading statement in connection with an application for a TCO may face fines of up to $22,200 for individuals and $111,000 for bodies corporate, or imprisonment for up to two years, or both. Additionally, any person who knowingly imports goods in contravention of a TCO may face fines of up to $22,200 for individuals and $111,000 for bodies corporate, as per section 136 of the Act. These penalties reflect the seriousness with which the Australian Government treats compliance with customs regulations.