EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712304
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.
Artique Designs Pty Ltd applied for a TCO in respect of certain personalised piggy banks on 30 July 2007.
Instrument
TCO No 0712304 was made on 08 October 2007. It declares that those certain personalised piggy banks 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. 0712304 is taken to have come into force on 30 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 was enacted to provide a framework for the administration of customs duties and related matters in Australia. One of the significant features of the Act is its provision for Tariff Concession Orders (TCOs), which are administrative instruments that allow for the reduction or exemption of customs duty on specified goods. The purpose of this legislation is to address the need for flexible customs duty arrangements that can cater to specific economic or developmental needs without requiring full legislative amendments. Enacted by the Parliament of Australia, the Customs Act aims to facilitate trade while ensuring the proper collection of duties and taxes. The policy objective behind TCOs is to provide targeted relief to industries or sectors that may be disadvantaged by high customs duties, thereby promoting economic growth and competitiveness.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines the procedure for Tariff Concession Orders (TCOs) which provide for a lower rate of customs duty on certain goods. The Act applies to individuals or entities that wish to apply for a TCO in relation to goods that are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The process begins when an application is submitted to the Chief Executive Officer of Customs (the CEO) under section 269F, who then assesses whether the application meets the core criteria, particularly if no substitutable goods are produced in Australia, as outlined in sections 269C and 269D of the Act. Once the CEO determines that the application meets these criteria, they issue a written order specifying the lower duty rate applicable to the goods. This legislative framework operates on a national level across Australia, with the Customs Act 1901 being a Commonwealth Act. The Tariff Concession Instrument No. 0712304, made on 8 October 2007, exemplifies this process by granting a tariff concession for certain personalised piggy banks, reducing the duty from 5% to free. The application of this TCO began on 30 July 2007, the date the application was lodged, and does not disadvantage any person or impose liabilities on any person in relation to actions taken prior to the TCO’s registration.
Key Provisions
The Customs Act 1901 (the Act) under Part XVA establishes a scheme through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (the CEO). Section 269F allows individuals to apply to the CEO for a TCO regarding specific goods, provided the goods do not fall under the category specified in section 269SJ, which lists goods ineligible for a TCO. If the CEO is satisfied that the application complies with the core criteria set out in section 269C, they must assess whether the application meets the criteria. This assessment hinges on whether, at the time of the application, any substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E. Section 269P(3) mandates that if the CEO is satisfied the application meets these criteria, they must issue a written TCO order, specifying the prescribed item in Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
The obligations under this Act for the CEO include assessing the validity of TCO applications, ensuring they meet the core criteria, and issuing written orders if the criteria are satisfied. Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons the TCO should not be made. This process ensures transparency and allows for public input. In the case of Tariff Concession Order No. 0712304, the CEO received no submissions against the application for the personalised piggy banks, leading to the issuance of the TCO on 8 October 2007. The TCO came into effect on 30 July 2007, the date the application was lodged, as per subsection 269S(1). This means that the rights of importers were beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not impose any liabilities on any person and does not disadvantage any person by affecting their rights as at the date of registration.
Sections 269P(3) and 269S of the Customs Act 1901 impose penalties for non-compliance or breaches related to TCOs. If an individual or entity fails to comply with the conditions set out in a TCO, they may be subject to civil or criminal penalties. For instance, under section 269U, any person who knowingly makes a false or misleading statement in an application for a TCO is liable to a penalty. The maximum penalty for this offence is 2,000 penalty units for a corporation and 1,000 penalty units for an individual. These penalties underscore the importance of accurate and truthful information in TCO applications, ensuring the integrity of the concession scheme. Furthermore, failure to adhere to the terms of a TCO may result in the imposition of additional duties or the revocation of the concession, thereby affecting the rights and obligations of the parties involved.