EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0713581
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.
Bose Pty Ltd applied for a TCO in respect of certain radio frequency remote controllers on 27 August 2007.
Instrument
TCO No 0713581 was made on 2 November 2007. It declares that those certain radio frequency remote controllers 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 0%.
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. 0713581 is taken to have come into force on 27 August 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 regulatory framework for the collection of customs duties and to facilitate the movement of goods across Australia’s borders. Part XVA of the Act establishes the procedure for Tariff Concession Orders (TCOs) that allow for the reduction of customs duty rates on specific goods. Enacted by the Parliament of Australia, this part of the Act addresses the gap in tariff regulation by providing a mechanism for the Chief Executive Officer of Customs to grant concessions based on certain criteria, primarily ensuring that the goods in question are not being produced in Australia. The policy objective is to support Australian industries by preventing the production of certain goods domestically when cheaper imports are available, thereby promoting economic efficiency and protecting local manufacturers. Bose Pty Ltd's application for a TCO concerning certain radio frequency remote controllers exemplifies the practical application of these provisions, resulting in a zero percent duty rate for the specified goods, down from the general rate of five percent.
Scope and Application
The Customs Act 1901, as amended, includes provisions for the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to goods that are the subject of an application for a tariff concession, where the applicant is a person or entity seeking to have a lower rate of customs duty applied to specific goods. The application process requires the CEO to determine if the goods meet the core criteria, specifically if no substitutable goods are being produced in Australia in the ordinary course of business. The scope of the Act includes any goods that are eligible for tariff concessions, subject to the exclusions listed in section 269SJ, which includes goods that cannot be subject to a TCO. The application of the Act is national, applying across Australia as it is a Commonwealth Act. The geographic reach extends to all goods imported into Australia that are subject to customs duty. Any person, including entities and importers, who imports the goods subject to the TCO can benefit from the lower rate of customs duty. The application of the Act may be extended or modified by subordinate instruments, such as the Customs Tariff Act 1995, which sets out the rates of duty applicable to goods. The Explanatory Statement for Instrument No. 0713581 provides a specific example of the application of the Act, detailing the process by which Bose Pty Ltd successfully applied for a TCO for certain radio frequency remote controllers, resulting in a reduction of the duty rate from 5% to 0%.
Key Provisions
The main operative sections of the Tariff Concession Order No. 0713581 (TCO) under the Customs Act 1901 (the Act) include section 269C, which outlines the core criteria for the application of a Tariff Concession Order (TCO). Specifically, section 269C(1) stipulates that the Chief Executive Officer of Customs (the CEO) must consider whether no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) requires the CEO to make a written order if satisfied that the application meets the core criteria. This order declares the goods in question to be subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff). In this instance, the TCO No. 0713581 specifies that certain radio frequency remote controllers are subject to item 50 of Schedule 4 to the Tariff, resulting in a duty rate of 0% instead of the general rate of 5%.
The obligations and requirements imposed by the Act on parties or entities governed by the TCO include the necessity for an applicant, such as Bose Pty Ltd, to demonstrate that the goods in question are not substitutable by any goods produced in Australia. This is a critical step under section 269C of the Act. The CEO must also ensure that the application does not involve goods specified in section 269SJ, which are ineligible for a TCO. Once the CEO accepts the application as valid, they must publish a notice in the Gazette under subsection 269K(1) of the Act, inviting any person who believes the TCO should not be made to submit their reasons. In the case of TCO No. 0713581, no such submissions were received. The CEO's decision to issue the TCO is further governed by the requirement to ensure that the rights of importers are beneficially affected, as outlined under paragraph 126(1)(r) of the Regulations.
The Act includes provisions for offences, penalties, and consequences for breaches, although these are not explicitly detailed in the explanatory statement. Generally, under the Customs Act 1901, breaches of customs regulations can result in civil penalties, including fines, and potentially criminal penalties if the breach is deemed to be of a serious nature. However, the specific penalties for non-compliance with the TCO provisions are not outlined in this explanatory statement. The Act and associated regulations provide a framework within which the CEO can enforce compliance, ensuring that the terms of the TCO are adhered to by all parties involved.