EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702891
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 water camping heaters on 23 February 2007.
Instrument
TCO No 0702891 was made on 18 May 2007. It declares that those certain water camping heaters 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. 0702891 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, enacted by the Australian Parliament, outlines a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO). This scheme was introduced to address the need for providing tariff concessions on certain goods, thus facilitating trade by potentially lowering customs duty rates on specified items. The Tariff Concession Instrument No. 0702891, made on 18 May 2007, pertains to the application by Coleman Brands Pty Limited for a TCO concerning certain water camping heaters. The CEO was satisfied that these goods did not have substitutable counterparts produced in Australia, thereby meeting the core criteria for the concession. Consequently, the CEO issued the TCO, making the rate of duty on these heaters free, down from the general rate of 5%. The TCO came into effect on the date the application was lodged, 23 February 2007, without imposing any liabilities on persons other than the Commonwealth and allowing importers to apply for duty refunds from that date.
Scope and Application
The Tariff Concession Instrument No. 0702891 under the Customs Act 1901 applies to the importation of certain water camping heaters, specifically those goods for which Coleman Brands Pty Limited applied for tariff concession on 23 February 2007. The instrument was issued by the Chief Executive Officer of Customs and provides that these goods are subject to a free rate of duty rather than the general rate of 5%. The application of this tariff concession is contingent upon the CEO being satisfied that no substitutable goods are produced in Australia, meaning there are no locally manufactured alternatives that could be used in place of the imported heaters. This concession does not affect the rights of any person as at the date of registration, ensuring that existing rights and liabilities remain unaffected by the concession. The concession came into force on the date the application was lodged, 23 February 2007, and applies nationally across Australia as per the Customs Act 1901. The application process and criteria for tariff concessions are governed by the Act, with specific provisions on substitutable goods and the ordinary course of business, and the CEO has the authority to make written orders under section 269P of the Act.
Key Provisions
The Customs Act 1901, particularly Part XVA, outlines the framework for Tariff Concession Orders (TCOs) (s 269F). A TCO can reduce the customs duty on specific goods, provided the Chief Executive Officer of Customs (CEO) determines that the application for such an order meets the core criteria. Section 269C stipulates that a TCO application meets these criteria if, on the day the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business (s 269C). 'Substitutable goods' are defined as those produced in Australia that serve a use corresponding to the goods in question (s 269D, s 269E).
Entities or individuals seeking a TCO must ensure that their application complies with these criteria. They must demonstrate that the goods they are applying for are not substitutable by any goods produced domestically. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested party to submit objections or submissions if they believe the TCO should not be granted (s 269K(1)). If no submissions are received, the CEO proceeds to make the order.
Non-compliance with the conditions of a TCO, or any attempt to circumvent the provisions of the Customs Act 1901, can result in legal consequences. Offences under the Customs Act may lead to criminal charges, including fines and imprisonment. For instance, under section 237 of the Act, the maximum penalty for contravening the Act can be significant, potentially including imprisonment for up to 10 years, especially for more serious breaches. Additionally, civil penalties may apply for non-compliance, with fines that can be substantial, depending on the severity and intent behind the breach.
The imposition of a TCO, such as Tariff Concession Order No. 0702891, which was applied to certain water camping heaters, demonstrates the practical application of these provisions. The TCO effectively reduced the duty on these goods from the general rate of 5% to free, subject to the conditions outlined. This reduction is conditional on the ongoing absence of substitutable goods produced in Australia. Any future production of such goods could potentially invalidate the TCO, leading to a re-evaluation of the duty applicable to these goods.