EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708023
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.
Australian Discount Retail (Trading) Pty Limited applied for a TCO in respect of certain floor standing and pedestal fans on 29 May 2007.
Instrument
TCO No 0708023 was made on 10 August 2007. It declares that those certain floor standing and pedestal fans 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. 0708023 is taken to have come into force on 29 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 Customs Act 1901 was amended to include Part XVA, which introduces the mechanism for Tariff Concession Orders (TCOs). These orders are made by the Chief Executive Officer of Customs (CEO) and apply a lower rate of customs duty to goods specified in the order. The Act was enacted by the Parliament of Australia to provide a streamlined process for businesses to apply for tariff concessions on goods that are not produced domestically and for which there are no suitable substitutes. The 2007 instrument, Tariff Concession Instrument No. 0708023, was introduced to address the specific application by Australian Discount Retail (Trading) Pty Limited for tariff concessions on certain floor standing and pedestal fans. The policy objective is to facilitate trade by reducing duty on imported goods where domestic production is not feasible, thus encouraging competition and consumer choice. The instrument was effective from the date of the application, 29 May 2007, and no submissions were received in opposition to the order.
Scope and Application
The Tariff Concession Instrument No. 0708023 under the Customs Act 1901 applies to the specific goods—certain floor standing and pedestal fans—that are subject to the instrument. The Act facilitates the process by which a Tariff Concession Order (TCO) can be made by the Chief Executive Officer of Customs (CEO), which allows for a lower rate of customs duty on the specified goods. The application for a TCO must meet certain core criteria, such as the absence of substitutable goods being produced in Australia at the time of application. The CEO must also ensure that the goods in question are not those specified in section 269SJ of the Act, which are ineligible for tariff concessions. The TCO was made on 10 August 2007, and it declares that the specified fans are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in the rate of duty being free instead of the general rate of 5%. The TCO came into force on 29 May 2007, the date the application was lodged, and it benefits importers by allowing them to apply for a refund of duty on goods imported since this date. Importantly, the TCO does not affect the rights of any person or impose any liabilities on anyone in respect of anything done or omitted before the date of registration.
Key Provisions
The main operative sections of this legislation concern the creation and implementation of Tariff Concession Orders (TCOs) under the Customs Act 1901 (section 269F). A TCO application can be submitted by a person to the Chief Executive Officer of Customs (CEO) in respect of goods that are not specified in section 269SJ of the Act (section 269C). If the CEO determines that the application meets the core criteria—specifically, that no substitutable goods were produced in Australia on the day the application was lodged (section 269P(3))—the CEO must issue a written order (section 269P). For instance, in this case, certain floor standing and pedestal fans were granted a TCO, reducing their customs duty rate from 5% to free (section 269P(3), TCO No. 0708023).
The obligations imposed by the Act require the CEO to carefully consider each TCO application, ensuring that the core criteria are met before issuing an order. This includes verifying that no substitutable goods were produced in Australia (section 269C). Once an application is accepted as valid, 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)). In this case, no submissions were received, allowing the CEO to proceed with issuing the TCO (TCO No. 0708023).
The Act also outlines specific consequences for non-compliance. While the explanatory statement does not detail specific penalties, breaches of customs regulations can lead to severe penalties, including fines and imprisonment. The maximum penalties for such breaches can be significant, reflecting the importance of adhering to the prescribed processes and criteria outlined in the Customs Act 1901. The rights of importers are protected, and they can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The TCO does not impose any liabilities on any person, ensuring that only the intended beneficiaries—in this case, importers of the specified fans—are affected.