EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0809736
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.
Skyfit Pty Ltd applied for a TCO in respect of certain pull up exercises on 26 May 2008.
Instrument
TCO No 0809736 was made on 15 August 2008. It declares that those certain pull up exercises 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. 0809736 is taken to have come into force on 26 May 2008.
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, includes a scheme under which Tariff Concession Orders (TCOs) can be issued to lower the customs duty on specific goods. This was introduced to address the problem of ensuring that certain goods that are not produced domestically can be imported at a reduced tariff, thus fostering competition and potentially lowering costs for consumers and businesses. The Tariff Concession Instrument No. 0809736, made by the Chief Executive Officer of Customs on 15 August 2008, applies to certain pull-up exercises, declaring that they are subject to a tariff concession, effective from the date the application was lodged, 26 May 2008. This particular TCO was introduced after Skyfit Pty Ltd applied for the concession on 26 May 2008, and no objections were received from the public following the required notice in the Gazette. The policy objective, as outlined in the Act, is to ensure that substitutable goods are not produced in Australia, thereby benefiting importers who can now apply for duty refunds on goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Order No. 0809736 under the Customs Act 1901 applies to goods specified in the order, which in this instance are certain pull-up exercises. The application for a tariff concession order was made by Skyfit Pty Ltd, and the order was issued by the Chief Executive Officer of Customs (CEO) on 15 August 2008. The concession effectively provides for a reduction of the duty rate from 5% to free for these specific goods, contingent upon the CEO's determination that no substitutable goods were produced in Australia on the date the application was lodged. The concession is geographically applicable within Australia and is limited to the goods specified in the order, as defined by the Customs Tariff Act 1995. The order does not extend to goods that cannot be subject to a tariff concession as specified in section 269SJ of the Customs Act 1901. The TCO applies retroactively to the date the application was lodged, which was 26 May 2008, without affecting any pre-existing rights or imposing any liabilities on persons other than the Commonwealth.
Key Provisions
The Customs Act 1901, specifically Part XVA, outlines the process for Tariff Concession Orders (TCOs), which are pivotal in determining the rate of customs duty on certain goods. Section 269F of the Act allows any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO, provided the goods in question are not explicitly excluded by section 269SJ. If the application is deemed valid, the CEO must assess whether it meets the core criteria specified in section 269C. For an application to meet these criteria, it must be established that, as of the date the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business. The definitions of terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are further elaborated in sections 269D, 269E, and 269F respectively. If the CEO determines that the application meets these criteria, they are required under section 269P(3) to issue a written order declaring that the goods in question are subject to a prescribed rate in Schedule 4 of the Customs Tariff Act 1995.
Entities subject to the Act, such as importers and applicants for a TCO, have specific obligations. For instance, applicants must ensure that their goods do not have substitutable equivalents produced in Australia as per section 269C. The CEO, on the other hand, is mandated to publish a notice in the Gazette, inviting submissions from any interested parties who may oppose the granting of a TCO, as per section 269K(1). Additionally, the CEO must rigorously evaluate whether the application complies with the core criteria outlined in section 269C. Failure to adhere to these obligations can lead to significant legal ramifications.
In terms of penalties and consequences, the Act does not explicitly state penalties for non-compliance with the TCO process. However, breaches of the Act or failure to meet the stipulated criteria can lead to the disqualification of the TCO application. In the case of Skyfit Pty Ltd, which applied for a TCO for certain pull-up exercises, the CEO's satisfaction that no substitutable goods were produced in Australia led to the issuance of TCO No. 0809736, effectively setting the duty rate for these goods at zero. The TCO took effect from 26 May 2008, the date the application was lodged, as per subsection 269S(1). The Act ensures that the TCO does not adversely affect the rights of any person, except the Commonwealth, with respect to actions taken prior to the TCO's effective date. Importers, however, benefit from the ability to apply for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations.