EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707662
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.
Hotshots Australia Pty Ltd applied for a TCO in respect of certain trading card albums on 22 May 2007.
Instrument
TCO No 0707662 was made on 3 August 2007. It declares that those certain trading card albums 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. 0707662 is taken to have come into force on 22 May 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. 0707662, enacted in 2007, amends the Customs Act 1901 to address the issue of providing tariff concessions for certain goods. This legislation was introduced to facilitate the application of reduced customs duty rates on specific goods that are not produced in Australia and for which no substitutable goods are available domestically. The instrument was developed under the authority of the Chief Executive Officer of Customs, who has the power to make Tariff Concession Orders (TCOs) as per section 269F of the Customs Act 1901. The primary policy objective, as outlined in the Act, is to ensure that TCOs are granted when there are no substitutable goods produced in Australia, thereby encouraging imports of certain goods and potentially benefiting importers by reducing their duty obligations. This approach aligns with the overarching aim of supporting Australian businesses and consumers by making specific goods more affordable.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the creation and implementation of Tariff Concession Orders (TCOs) which provide lower rates of customs duty on specified goods. These orders are issued by the Chief Executive Officer of Customs, following an application by a person or entity, and must meet certain criteria to be approved. The primary criterion is that the goods in question should not have any substitutable goods produced in Australia in the ordinary course of business, as defined by the Act. Exclusions to this scheme include goods specified in section 269SJ of the Act, which are ineligible for tariff concessions. The scope of the Act is national, applying across all jurisdictions in Australia, although the specific application of tariff concessions will depend on the goods involved and the terms of any relevant TCOs. The application of the Act can be extended or modified through subordinate instruments, which may further define terms such as 'ordinary course of business' and 'substitutable goods'.
Key Provisions
The main operative sections of the Customs Act 1901 in relation to Tariff Concession Orders (TCOs) are sections 269F, 269C, 269B, and 269P. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. The CEO must then decide whether the application meets the core criteria set out in section 269C. According to this section, a TCO application meets the core criteria if no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they are required under section 269P(3) to make a written order (a TCO) that declares the goods in question are subject to a lower rate of customs duty as specified in the order.
The Act imposes specific obligations and requirements on the parties involved in the process of obtaining a TCO. Firstly, the applicant, such as Hotshots Australia Pty Ltd in this case, must submit a valid application to the CEO. The CEO, in turn, must ensure that the application is not in respect of goods specified in section 269SJ of the Act and must publish a notice in the Gazette inviting any interested parties to lodge a submission if they believe the TCO should not be made. The CEO must then assess whether the application meets the core criteria and, if so, proceed to issue the TCO. Once the TCO is issued, it becomes effective from the date the application was lodged, as stipulated in subsection 269S(1) of the Act.
The Customs Act 1901 also outlines consequences and penalties for breaches of its provisions, though these are not specifically detailed in the context of TCOs. Generally, breaches of the Customs Act can result in both civil and criminal penalties. Civil penalties may include fines and the forfeiture of goods, while criminal penalties can include imprisonment, particularly if the breach involves fraudulent or wilful conduct. The exact penalties would depend on the specific nature of the breach and could be subject to the general provisions of the Customs Act and any related regulations.
In this specific case, the TCO No. 0707662 provides that certain trading card albums are subject to a zero percent duty rate instead of the general rate of 5 percent, effective from the date the application was lodged, 22 May 2007. The rights of importers will be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force. Importantly, the TCO does not impose any liabilities on any person and does not affect the rights of any person other than the Commonwealth as at the date of registration.