EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0826800
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.
Addlon Trading applied for a TCO in respect of certain darts accessories and boards on 18 August 2008.
Instrument
TCO No 0826800 was made on 07 November 2008. It declares that those certain darts accessories and boards 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. 0826800 is taken to have come into force on 18 August 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 Parliament of Australia, establishes a framework within which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders provide for a reduced rate of customs duty on specified goods. This particular legislative instrument, known as Tariff Concession Instrument No. 0826800, was introduced to address the gap in tariff rates for specific goods, ensuring they are treated fairly under the customs duty system. The instrument was created following an application by Addlon Trading for a tariff concession on certain darts accessories and boards, and it aims to provide tariff relief by setting the duty rate for these goods at zero, effectively making them duty-free. This legislative measure was taken after considering that no substitutable goods were being produced in Australia, thereby meeting the core criteria set out in the Customs Act 1901.
Scope and Application
The Customs Act 1901, through Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders, when made, apply to specific goods and reduce the customs duty rate as specified in Schedule 4 to the Customs Tariff Act 1995. A TCO can be applied for by any person in respect of goods not listed in section 269SJ of the Customs Act 1901, which excludes certain specified goods from the scheme. The application must meet the core criteria set out in section 269C of the Act, primarily ensuring that no substitutable goods are produced in Australia in the ordinary course of business. If these criteria are satisfied, the CEO must issue a TCO. The instrument applies nationwide, reflecting the federal nature of the Customs Act 1901, and its effect is immediate from the date the application is lodged. The application process requires public notification, inviting objections, though in this case, no submissions were received. Importantly, the TCO does not retroactively affect the rights of persons other than the Commonwealth and does not impose any new liabilities, while potentially allowing importers to claim refunds on duties paid prior to the order’s effective date.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0826800 under the Customs Act 1901 (section 269P(3)) declare that certain darts accessories and boards are subject to a Tariff Concession Order (TCO). This instrument was made on 7 November 2008, following an application by Addlon Trading on 18 August 2008, which was subsequently accepted by the Chief Executive Officer of Customs (CEO). The TCO applies item 50 of Schedule 4 to the Customs Tariff Act 1995 to these goods, resulting in a concession from the general rate of duty of 5% to a rate of duty of free. This effectively means that the goods specified in the TCO are exempt from customs duty.
The Act imposes several obligations on the parties involved in the TCO process. Firstly, under section 269F, a person can apply to the CEO for a TCO in respect of goods, provided that the goods are not specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. Secondly, under section 269C, the CEO must ensure that the application meets the core criteria, which includes verifying that no substitutable goods were produced in Australia on the day the application was lodged, as defined by section 269D. Additionally, the CEO must publish a notice in the Gazette, as per section 269K(1), inviting any person to lodge a submission if they consider there are reasons why the TCO should not be made.
Breaching the obligations or requirements set out in the Customs Act 1901 can lead to various consequences. Firstly, if the CEO fails to make a written TCO order when the application meets the core criteria, this could be considered non-compliance with the Act. While specific penalties for such administrative failures are not explicitly stated in the explanatory statement, breaches of customs legislation generally can result in civil and criminal penalties. These can include fines, imprisonment, or both, depending on the severity and intent of the breach. Under section 269 of the Customs Act 1901, individuals or entities found guilty of offences related to customs duty evasion or incorrect declarations may face substantial penalties. For example, penalties can include fines up to $22,200 or imprisonment for up to five years, or both, for serious breaches. The precise penalties would depend on the specific circumstances and the discretion of the court.