EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0811695
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.
A & R Kohn Family Trust applied for a TCO in respect of certain loop handle carry bag making line on 06 June 2008.
Instrument
TCO No 0811695 was made on 22 August 2008. It declares that those certain loop handle carry bag making line 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. 0811695 is taken to have come into force on 06 June 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 Tariff Concession Instrument No. 0811695, enacted in 2008, is an amendment to the Customs Act 1901, addressing the need for a streamlined process to reduce customs duty on specific goods where there is no local production. This instrument was introduced to facilitate the application of tariff concessions by allowing the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) for goods not produced domestically, thereby reducing the duty on these goods. This legislative measure was enacted by the Australian Parliament to ensure that the application process for tariff concessions is efficient and responsive to market needs. The policy objective is to promote fair trade practices by preventing the imposition of customs duties on goods where no equivalent product is manufactured locally, thus encouraging imports and supporting the competitive landscape of the Australian market.
The process for making a TCO involves an application to the CEO, who must determine if the goods in question meet the core criteria specified under the Customs Act 1901. If the CEO is satisfied that the application meets these criteria, a TCO is issued, resulting in a reduced rate of customs duty for the specified goods. In the case of Instrument No. 0811695, the A&R Kohn Family Trust applied for a TCO concerning a loop handle carry bag making line, and after verification, the CEO determined that no substitutable goods were produced in Australia, thereby granting the concession and setting the duty rate at free, down from the general rate of 5%. The TCO came into effect on the date of application, 6 June 2008, without affecting the rights of any person as at the date of registration, and without imposing any new liabilities.
Scope and Application
The Customs Act 1901, through Part XVA, governs the process by which Tariff Concession Orders (TCOs) are made by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on specified goods. This Act applies to individuals and entities who may apply for tariff concessions on goods that are not specified as ineligible under section 269SJ. The application process requires the CEO to assess whether the goods in question meet the core criteria, specifically whether there are no substitutable goods produced in Australia in the ordinary course of business. If the application satisfies these conditions, the CEO must issue a TCO, which then reduces the customs duty on those goods. The geographic scope of this legislation is national, as it pertains to the application of customs duties across Australia. The act also stipulates that the TCO does not affect pre-existing rights or liabilities of persons other than the Commonwealth, and any rights of importers will be positively impacted, including the potential for a refund of duties paid on such goods since the TCO's effective date. Subordinate instruments may further extend or restrict the application of this legislation.
Key Provisions
The main operative sections of the Customs Act 1901, as amended by Tariff Concession Instrument No. 0811695, pertain to Tariff Concession Orders (TCOs) under section 269F (1) and the core criteria for such orders under section 269C. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. The CEO is required to make a written order if the application meets the core criteria, which are set out in section 269C and include the condition that no substitutable goods are produced in Australia on the day the application was lodged. The TCO, once made, applies the prescribed rate of duty specified in Schedule 4 of the Customs Tariff Act 1995, which in this case is a free rate of duty for the specified goods.
The obligations and requirements imposed by this Act on the parties involved are primarily centred around the application process for a TCO. An applicant must ensure that their application complies with the criteria specified in section 269C, and the CEO must rigorously assess whether these criteria are met before making the TCO. This includes verifying that no substitutable goods are being produced in Australia, as outlined in section 269D, and ensuring that the application is not in respect of goods that are ineligible for a TCO under section 269SJ. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting any person who might have objections to the TCO to lodge submissions with the CEO.
The Act also outlines specific offences and penalties for breaches. While the Act does not explicitly state penalties for non-compliance with the TCO provisions, breaches of related customs laws generally attract penalties as outlined in other sections of the Customs Act 1901. For example, under section 236, engaging in fraudulent conduct in relation to customs duty can result in significant fines and imprisonment. Furthermore, any person who knowingly makes a false statement in connection with a TCO application may face penalties for providing false or misleading information, which can include substantial fines or imprisonment. The specifics of these penalties depend on the severity of the offence and the applicable provisions of the Customs Act 1901.