EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0708819
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.
M L Watersports Pty Ltd applied for a TCO in respect of certain tow sport kneeboards on 08 June 2007.
Instrument
TCO No 0708819 was made on 17 August 2007. It declares that those certain tow sport kneeboards 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. 0708819 is taken to have come into force on 08 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 Australian Parliament, provides a framework for the regulation of customs and excise, including the imposition of customs duty on imported goods. The Act was updated to introduce a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs, aiming to provide relief from customs duty on certain goods. The introduction of this scheme addresses the gap in facilitating duty concessions on goods where appropriate, thereby supporting industry and commerce by potentially lowering import costs. The Tariff Concession Instrument No. 0708819, made under this Act, specifically aims to provide a tariff concession for certain tow sport kneeboards, reducing the duty from 5% to free, which directly benefits importers by potentially allowing them to claim refunds on duties paid before the concession took effect.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the creation and application of Tariff Concession Orders (TCOs), which are used to provide lower rates of customs duty on certain goods. This provision applies to any person or entity that seeks to import goods into Australia and can benefit from a reduced customs duty rate under a TCO. The application of a TCO is determined by the Chief Executive Officer of Customs (CEO), who must assess whether the application meets the core criteria as specified in section 269C of the Act. This involves confirming that no substitutable goods are produced in Australia in the ordinary course of business at the time the application is lodged. The TCO mechanism is available nationally across Australia and applies to all importers who meet the criteria. However, certain goods specified in section 269SJ of the Act cannot be subject to a TCO. The Act also allows for the creation of subordinate instruments to extend or restrict the application of TCOs further. Once a TCO is registered, it does not affect the rights of any person in a way that would disadvantage them or impose liabilities for actions taken prior to the registration date. Importers, however, may benefit from the TCO by applying for a refund of duties paid on goods imported since the effective date of the TCO.
Key Provisions
The Tariff Concession Order No. 0708819, issued under the Customs Act 1901 (section 269F), allows for a reduced customs duty rate on certain tow sport kneeboards, as applied under item 50 of Schedule 4 to the Customs Tariff Act 1995. The general rate of duty for these goods is 5%, but the order specifies that the rate for the goods subject to the TCO is free (subsection 269P(3)). This concession is contingent upon the Chief Executive Officer of Customs (CEO) being satisfied that no substitutable goods were produced in Australia on the date the application was lodged (section 269C).
The Act imposes several obligations on parties applying for a TCO. Firstly, the application must not be in respect of goods specified in section 269SJ of the Act, which excludes certain goods from eligibility. Secondly, the applicant must provide sufficient evidence that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. The CEO must also publish a notice in the Gazette inviting submissions from any person who considers the TCO should not be made (subsection 269K(1)). If no submissions are received, the CEO can proceed with making the TCO.
Breaching the requirements of the Customs Act 1901 can result in various civil and criminal consequences. If a person knowingly makes a false statement or omission in an application for a TCO, they may be liable for a penalty. The maximum penalty for each offence is 10,000 penalty units or imprisonment for five years, or both, as stipulated under section 277 of the Act. Additionally, any failure to comply with the TCO or the conditions attached to it may lead to further penalties as outlined in the Customs Act 1901 and associated regulations.
It is important to note that the TCO does not affect the rights of any person other than the Commonwealth as at the date of registration and does not impose any liabilities on any person in respect of actions taken before the date of registration. Importers, however, will benefit from the reduced duty rates and can apply for a refund of duty on goods imported since the TCO came into force on 8 June 2007, as per paragraph 126(1)(r) of the Regulations. This legislative provision ensures that the rights of importers are protected and that they can take advantage of the tariff concessions without incurring any additional liabilities.