EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0703436
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.
Target Australia Pty Ltd applied for a TCO in respect of certain kitchenware or toilet articles on 2 March 2007.
Instrument
TCO No 0703436 was made on 25 May 2007. It declares that those certain kitchenware or toilet articles 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 0%.
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. 0703436 is taken to have come into force on 2 March 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, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for a reduced rate of customs duty on specified goods, provided certain criteria are met. The 2007 Tariff Concession Instrument No. 0703436, published under this Act, addresses the specific need to provide tariff concessions on certain kitchenware or toilet articles, effectively reducing the customs duty from 5% to 0%. The objective of this measure is to support Australian businesses by lowering the cost of importing specific goods, thereby potentially increasing their competitiveness in the domestic market. The instrument was enacted without any submissions against it, indicating a broad acceptance of the tariff concessions outlined.
Scope and Application
The Customs Act 1901, as amended, provides for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, which can apply a lower rate of customs duty on specified goods. This scheme applies to individuals or entities that make an application to the CEO for a TCO concerning goods that are not specified in section 269SJ of the Act. The application must meet core criteria, such as the absence of substitutable goods produced in Australia in the ordinary course of business, as outlined in sections 269C, 269D, 269E, and 269S of the Act. Once the CEO is satisfied that the application meets these criteria, they must make a written TCO, as per section 269P(3) of the Act. The TCO applies nationally across Australia, impacting the import duties on the specified goods. The Act mandates the CEO to publish a notice in the Gazette inviting public submissions on the proposed TCO, although in the case of TCO No 0703436, no submissions were received. The TCO is effective from the date the application was lodged, and it does not disadvantage any person by affecting their rights or imposing liabilities in respect of actions taken prior to the registration of the TCO.
Key Provisions
The primary operative sections of the Customs Act 1901, as referenced in this legislation, are sections 269C, 269B, 269E, 269F, 269P, and 269SJ. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO), provided that the goods in question are not specified in section 269SJ, which outlines the goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, such as there being no substitutable goods produced in Australia as per section 269C, the CEO must then make a TCO. This TCO declares that the goods in question are subject to a prescribed rate of duty as per Schedule 4 of the Customs Tariff Act 1995.
The Act imposes specific obligations on parties applying for a TCO. The applicant must ensure that the goods are not prohibited under section 269SJ and must provide sufficient evidence that no substitutable goods are produced in Australia. Furthermore, the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made, as per subsection 269K(1). The CEO is required to consider any submissions received and make a decision based on whether the application meets the core criteria.
Failure to comply with the provisions of the Customs Act 1901 or the terms of a TCO can result in various civil and criminal consequences. If a person knowingly or recklessly makes a false or misleading statement in an application for a TCO, they may face a penalty as per section 283AB of the Customs Act 1901. The maximum penalty for this offence is 2,500 penalty units, which can be significant given the current penalty unit value. Additionally, any person who fails to comply with the terms of a TCO may face further penalties, including fines and potential legal action to enforce compliance.
The Tariff Concession Order No. 0703436, which was made on 25 May 2007, effectively reduces the duty on certain kitchenware or toilet articles from the general rate of 5% to 0%. This concession is contingent on the CEO's satisfaction that no substitutable goods are produced in Australia. The order came into effect on 2 March 2007, the date the application was lodged. This TCO does not retroactively affect any rights or impose any liabilities on persons other than the Commonwealth. Importers of the specified goods can apply for a refund of duty on goods imported since the TCO's effective date, as outlined in paragraph 126(1)(r) of the Regulations.