EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708404
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.
Hot Shots (Aust.) Pty. Ltd. applied for a TCO in respect of certain trading card albums on 04 June 2007.
Instrument
TCO No 0708404 was made on 10 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 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. 0708404 is taken to have come into force on 04 June 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 Parliament of Australia, includes provisions for Tariff Concession Orders (TCOs) under Part XVA. This legislative framework was introduced to provide relief on customs duties for specific goods, ensuring that Australian businesses can remain competitive by reducing the cost of imported goods that are not produced domestically. The Tariff Concession Instrument No. 0708404 was created to address the specific application by Hot Shots (Aust.) Pty. Ltd. for tariff concessions on certain trading card albums. By applying the free duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995, this instrument facilitated the reduction of the general duty rate from 5% to zero, thereby alleviating the financial burden on importers of these goods. The policy objective, as stated, is to ensure that tariff concessions are granted where no substitutable goods are produced in Australia, thus promoting fair trade practices and supporting Australian importers.
Scope and Application
The Customs Act 1901, specifically Part XVA, outlines the procedure for Tariff Concession Orders (TCOs) that can be issued by the Chief Executive Officer of Customs (CEO). These orders are applicable to goods for which a lower rate of customs duty is granted, as determined by the CEO. A person can apply for a TCO under section 269F of the Act, provided that the goods in question are not excluded as per section 269SJ. The CEO assesses the application based on core criteria outlined in sections 269C, 269B, and 269D of the Act, which pertain to the production of substitutable goods in Australia. If the CEO is satisfied that the application meets the criteria, a TCO is issued, effectively applying a prescribed rate of duty from the date the application was lodged. This legislative framework ensures that eligible goods benefit from reduced customs duty rates, enhancing trade efficiency and potentially benefiting importers who can apply for duty refunds on eligible imports post the TCO's effective date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0708404 are section 269C, which outlines the core criteria for a Tariff Concession Order (TCO), and section 269P(3), which requires the Chief Executive Officer (CEO) of Customs to make a written TCO if the application meets these criteria (sections 269C and 269P(3)). The instrument declares that certain trading card albums, which are the subject of the TCO application, are goods to which a specific item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)). This declaration effectively provides a tariff concession, meaning the general rate of duty on these goods, which is 5%, is reduced to free (section 269P(3)). The TCO is taken to have come into force on the date the application was lodged, 04 June 2007 (subsection 269S(1)).
The Customs Act 1901 imposes several obligations and requirements on the parties governed by this Act, particularly on the CEO of Customs. The CEO must determine whether a TCO application meets the core criteria, which requires assessing if no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not be made (subsection 269K(1)). The CEO must also consider any submissions received and make a decision based on the information available. In this instance, no submissions were received, allowing the CEO to proceed with making the TCO.
The Act also sets out specific offences and penalties for breaches, though the instrument does not explicitly detail these in relation to TCOs. Generally, under the Customs Act 1901, breaches of the Act can lead to criminal charges, with penalties including fines and imprisonment, or civil penalties. The maximum penalties for contravening customs laws can be severe, with fines up to $22,200 and imprisonment for up to five years for serious offences (subsection 277(1)). The precise penalties depend on the nature and severity of the breach.
The TCO No. 0708404 ensures that the rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not affect the rights of any person other than the Commonwealth or impose any liabilities on any person in respect of actions taken before the TCO was registered (subsection 269S(1)). This means that no existing rights or liabilities of third parties are adversely impacted by the TCO, safeguarding the interests of all parties involved.