EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0714764
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.
Sony Australia Limited applied for a TCO in respect of certain loudspeaker docking station on 11 September 2007.
Instrument
TCO No 0714764 was made on 16 November 2007. It declares that those certain loudspeaker docking station 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. 0714764 is taken to have come into force on 11 September 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 Tariff Concession Instrument No. 0714764, enacted in 2007 under the Customs Act 1901, addresses the issue of providing tariff concessions for certain goods that are not produced in Australia and for which no substitutable goods are available. This instrument was introduced to facilitate lower customs duties on specific imported goods, thereby promoting fair trade practices and potentially aiding Australian businesses by reducing costs associated with imported goods. The enacting body responsible for this legislation is the Chief Executive Officer of Customs, who must assess applications against the core criteria stipulated in the Act. The policy objective is to ensure that Australian consumers and businesses have access to competitively priced goods while also considering the broader economic impacts of such tariff concessions.
Scope and Application
The Customs Act 1901, through its Tariff Concession Instrument No. 0714764, applies to entities and individuals who are involved in the importation of specified goods into Australia. The instrument specifically pertains to the process of applying for and receiving a Tariff Concession Order (TCO) from the Chief Executive Officer of Customs, which allows for a lower rate of customs duty on particular goods. The instrument targets the importation of certain loudspeaker docking stations for which Sony Australia Limited applied for the concession. The application of the TCO is contingent on the CEO determining that no substitutable goods were produced in Australia on the date the application was lodged, thereby ensuring that the concession does not undermine local production.
The TCO, once effective from the date the application was lodged, applies nationally across Australia, impacting the importation process and duty rates for the specified goods. The instrument provides a streamlined pathway for importers of these goods to potentially benefit from reduced duty rates and seek refunds for duties paid prior to the concession's effective date. It is noteworthy that the instrument does not impose any new liabilities or disadvantage any person other than the Commonwealth, and it does not affect pre-existing rights of parties involved in the importation process. The instrument’s scope is defined by the Customs Act 1901 and is further clarified and implemented through the Customs Regulations 1993.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (the CEO) (section 269F). A TCO is essentially a concession that reduces the rate of customs duty on specified goods. The core criteria for approving a TCO application, as outlined in section 269C, require that on the day the application is submitted, no substitutable goods are being produced in Australia in the ordinary course of business. These definitions are further clarified in sections 269D, 269E, and 269F, where 'substitutable goods' are defined as goods produced in Australia that could serve the same function or design as the goods specified in the TCO application.
The Act imposes specific obligations on both the CEO and the applicants for a TCO. The CEO must determine whether an application meets the core criteria set out in section 269C. Once satisfied that an application meets these criteria, the CEO is mandated to issue a written TCO (section 269P(3)). Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe there are reasons why the TCO should not be granted (subsection 269K(1)). For instance, in the case of Sony Australia Limited's application for a TCO concerning certain loudspeaker docking stations, the CEO was required to follow this process and subsequently issued TCO No. 0714764 on 16 November 2007.
Failure to comply with the requirements of the Act can result in both civil and criminal penalties. Section 269SJ specifies certain goods that cannot be subject to a TCO, and any attempt to circumvent this provision could lead to legal action. The Act does not explicitly outline penalties for non-compliance, but breaches of similar provisions in other sections of the Customs Act can result in substantial fines and, in some cases, imprisonment. For instance, under section 131 of the Act, contravening provisions of the Act can attract fines of up to $22,200 for individuals and $111,000 for corporations, alongside possible imprisonment terms.
Under the Tariff Concession Instrument No. 0714764, the CEO's decision to grant a TCO to Sony Australia Limited effectively reduced the customs duty on specified loudspeaker docking stations from a general rate of 5% to free. The TCO came into force on the day the application was lodged, 11 September 2007, and does not affect the rights of any person other than the Commonwealth in relation to actions taken prior to the TCO's effective date (subsection 269S(1)). This means that importers of these goods can apply for a refund of duty on imports made since the TCO's effective date (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any new liabilities on any person.