EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0837915
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.
Crayola Pty Ltd applied for a TCO in respect of certain pens on 30 October 2008.
Instrument
TCO No 0837915 was made on 13 March 2009. It declares that those certain pens 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. 0837915 is taken to have come into force on 30 October 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, provides a framework for the regulation of customs and excise duties. It establishes a scheme for Tariff Concession Orders (TCOs), which the Chief Executive Officer of Customs (CEO) can make to lower the rate of customs duty on certain goods. The Tariff Concession Instrument No. 0837915 was introduced to address a specific gap in the legislation by allowing for tariff concessions on goods where no substitutable goods are produced in Australia. This instrument was made in response to an application from Crayola Pty Ltd for a TCO on certain pens, resulting in the pens being subject to a free rate of duty instead of the general rate of 5%. The policy objective behind this measure is to support Australian importers by reducing the cost of importing goods that are not produced domestically, thereby enhancing competitiveness and potentially lowering consumer prices.
Scope and Application
The Customs Act 1901, as amended, facilitates the establishment of Tariff Concession Orders (TCOs) under its Part XVA, allowing for reduced customs duty rates on specific goods. The application process for a TCO is initiated by a person or entity seeking tariff concessions, and the Chief Executive Officer of Customs evaluates the application against specified criteria, such as the absence of substitutable goods produced in Australia. Once the CEO determines that the application meets the core criteria, a TCO is issued, which specifies the applicable tariff rate. This process is designed to benefit importers by potentially reducing the duty payable on goods, and it applies from the date the application is lodged. The TCO does not affect any existing rights or liabilities of persons other than the Commonwealth, ensuring that there are no retroactive disadvantages or impositions on third parties.
The application of TCO No. 0837915, made in respect of certain pens by Crayola Pty Ltd, illustrates the operation of this legislative scheme. The CEO published a notice inviting public submissions, although none were received. The TCO came into force on 30 October 2008, the date of the application, and it alters the duty rate for the specified pens from 5% to free. This particular TCO is geographically and jurisdictionally applicable within Australia, and it is subject to the overarching provisions of the Customs Act 1901 and the Customs Tariff Act 1995. The TCO does not extend or restrict its application through subordinate instruments, maintaining its defined scope as specified in the primary legislation.
Key Provisions
The Customs Act 1901 (the Act) includes a provision for the Chief Executive Officer of Customs (the CEO) to make Tariff Concession Orders (TCOs) as outlined in Part XVA. These orders allow for a lower rate of customs duty to be applied to goods specified in a TCO (s 269F). An application for a TCO can be made by a person to the CEO (s 269F). The CEO must consider the application and determine if it meets the core criteria, which include the absence of substitutable goods produced in Australia on the day the application is lodged (s 269C). If the CEO is satisfied that the application meets these criteria, a TCO must be made (s 269P(3)).
The obligations imposed by the Act on parties include ensuring that any TCO application is not in respect of goods specified in section 269SJ, which lists goods that cannot be subject to a TCO. Additionally, the CEO must publish a notice in the Gazette inviting submissions if there are reasons why the TCO should not be made (s 269K(1)). The CEO must also consider any submissions received and make a decision based on the core criteria. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the registration of a TCO (s 269S(1)).
The Act includes provisions for offences and penalties, although the Explanatory Statement does not specify these. Typically, breaches of the Customs Act 1901 can lead to civil or criminal penalties. Civil penalties may include fines up to $22,200 for individuals and $111,000 for bodies corporate, while criminal penalties can result in fines and imprisonment depending on the severity of the breach. The exact penalties would be determined by the specific sections of the Act that are contravened.
In summary, the Act outlines the process for applying for and making TCOs, the obligations of the CEO and applicants, and the implications for rights and liabilities of persons affected by the TCO. While the specific penalties for breaches are not detailed in the Explanatory Statement, they can include significant fines and potential imprisonment.