EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706117
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.
Thermos Pty Ltd applied for a TCO in respect of certain beverage mugs on 26 April 2007.
Instrument
TCO No 0706117 was made on 6 July 2007. It declares that those certain beverage mugs 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. 0706117 is taken to have come into force on 26 April 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 facilitate the administration of customs duties and related matters. The Act includes a scheme under which Tariff Concession Orders (TCOs) can be made, providing for lower rates of customs duty on specified goods. The Customs Act 1901 aims to address the need for a streamlined process to adjust customs duties on certain goods, enhancing trade efficiency and fairness. The Tariff Concession Instrument No. 0706117, issued on 6 July 2007, exemplifies this scheme by reducing the customs duty on specific beverage mugs from 5% to 0%. This instrument was introduced following an application by Thermos Pty Ltd, and the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thereby meeting the core criteria for the concession. The instrument came into force on 26 April 2007, the date the application was lodged, and benefits importers by potentially allowing them to apply for a refund of duties on imports of these goods since that date.
Scope and Application
The Tariff Concession Instrument No. 0706117 made under the Customs Act 1901 applies to the goods specified in the instrument, namely certain beverage mugs, and provides for a concession on the rate of customs duty applied to these goods. The Act applies to the Chief Executive Officer of Customs, who is responsible for making Tariff Concession Orders (TCO) that determine the eligibility of goods for tariff concessions. The instrument was made in response to an application by Thermos Pty Ltd and came into force on the date the application was lodged, 26 April 2007. The geographic and jurisdictional reach of the Act is national, as it is a Commonwealth Act, and the concession applies to the importation of the specified goods into Australia. The Act does not impose any liabilities on any person and does not affect the rights of persons as at the date of registration in respect of anything done or omitted before that date. The CEO is required to publish a notice in the Gazette inviting submissions on the TCO application, although in this case, no submissions were received. The application of the Act may be extended or restricted through subordinate instruments, as provided by the Customs Act 1901.
Key Provisions
The Customs Act 1901 establishes a framework under which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) (section 269F). The primary function of these orders is to apply a lower rate of customs duty to specified goods, provided certain criteria are met. To qualify for a TCO, the goods must not be substitutable by any goods produced in Australia in the ordinary course of business (section 269C). A TCO can only be issued if the application for it is lodged and deemed to meet the core criteria (section 269P(3)). Once the CEO is satisfied that the application meets these criteria, a TCO is issued, which declares the specified goods to be subject to a lower rate of duty as prescribed in Schedule 4 to the Customs Tariff Act 1995 (section 269P(3)). In the case of Thermos Pty Ltd, a TCO was issued on 6 July 2007 for certain beverage mugs, setting their duty rate to 0% (item 50 of Schedule 4 to the Tariff).
The Act imposes certain obligations on both the CEO and applicants for TCOs. The CEO is required to consider applications for TCOs and decide whether they meet the core criteria (section 269C). This includes ensuring that the goods are not substitutable by any goods produced in Australia in the ordinary course of business (section 269E). If the CEO is satisfied that the application meets these criteria, they must issue a written order in the form of a TCO (section 269P(3)). Additionally, 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 (subsection 269K(1)). On the other hand, applicants must ensure that their applications are valid and meet the specified criteria, including providing sufficient evidence that the goods are not substitutable by any goods produced in Australia.
Breach of the conditions set out in the Customs Act 1901 can lead to various civil and criminal consequences. For instance, any person found to be falsely claiming benefits under a TCO may be subject to penalties under the Crimes Act 1914. The maximum penalties can include fines and imprisonment, depending on the severity of the breach. The Act does not explicitly state the maximum penalties for breaches related to TCOs, but penalties under the Crimes Act 1914 can be severe, with fines and imprisonment terms varying based on the nature and extent of the offence. Additionally, any misuse of a TCO, such as using it to import goods that do not meet the specified criteria, could result in the imposition of the standard duty rates and potential fines. Importers and other stakeholders must therefore ensure compliance with the Act's provisions to avoid these consequences.