EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0710297
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.
Yamaha Music Australia Pty Ltd applied for a TCO in respect of certain classical music or folk music guitars on 02 July 2007.
Instrument
TCO No 0710297 was made on 07 September 2007. It declares that those certain classical music or folk music guitars 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. 0710297 is taken to have come into force on 02 July 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, introduced a framework for the Customs Tariff Concession Orders (TCOs) as a means to address tariff-related issues. The Tariff Concession Instrument No. 0710297, issued on 7 September 2007, is an example of how this framework can be applied. This instrument was introduced to provide tariff concessions on certain classical music or folk music guitars by Yamaha Music Australia Pty Ltd, with the aim of ensuring that no substitutable goods were produced in Australia, thereby meeting the core criteria outlined in the Act. The policy objective here is to facilitate the importation of goods that are not domestically produced, thus benefiting importers by potentially reducing the duty payable on these specific types of guitars.
Scope and Application
The Tariff Concession Instrument No. 0710297, made under section 269F of the Customs Act 1901, applies to the specific case of certain classical music or folk music guitars for which Yamaha Music Australia Pty Ltd submitted an application for a Tariff Concession Order (TCO) on 02 July 2007. The Instrument was issued on 07 September 2007 by the Chief Executive Officer of Customs, who determined that no substitutable goods were produced in Australia in the ordinary course of business, thereby meeting the core criteria set out in section 269C of the Act. As a result, the CEO issued TCO No. 0710297, which reduced the rate of duty on these specified guitars from the general rate of 5% to free. The application of this TCO is governed by the jurisdictional reach of the Customs Act 1901, which is Commonwealth legislation. The TCO does not extend to any goods specified in section 269SJ of the Act, which outlines those goods that are ineligible for tariff concessions. Furthermore, the TCO does not affect any pre-existing rights of persons other than the Commonwealth and does not impose any liabilities on such persons. The TCO's commencement date is the day on which the application was lodged, in accordance with subsection 269S(1) of the Act.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0710297, under the Customs Act 1901, focus on the establishment and conditions for Tariff Concession Orders (TCOs) (sections 269C, 269F, 269K, 269P). A TCO application can be submitted to the Chief Executive Officer of Customs (CEO) by any person to seek a lower rate of customs duty on specified goods (section 269F). If the CEO determines that the application meets the core criteria, including the absence of substitutable goods produced in Australia (section 269C), a TCO is issued. This instrument specifically addresses certain classical music or folk music guitars, applying a duty rate of free instead of the general rate of 5% (section 50 of Schedule 4 to the Tariff).
The obligations imposed by this Act on parties and entities include the requirement for the CEO to assess whether an application for a TCO meets the core criteria, which involves confirming that no substitutable goods are produced in Australia (section 269C). The CEO must also publish a notice in the Gazette, inviting any person who might oppose the TCO to lodge a submission (section 269K). If no objections are received, the CEO proceeds to issue the TCO. Importers benefit from the ability to apply for a refund of duty on goods imported since the date the TCO is considered to have come into force (Regulation 126(1)(r)).
Offences and penalties under the Customs Act 1901 may apply if there is non-compliance with the terms of a TCO or if there are fraudulent activities related to the importation of goods subject to a TCO. While the specific penalties for breaches are not detailed in this explanatory statement, they generally encompass both civil and criminal consequences. For instance, under section 211 of the Customs Act 1901, penalties for contraventions can include fines and imprisonment, depending on the severity of the offence. The exact penalties would need to be determined in accordance with the broader provisions of the Act and relevant regulations.