EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0842699
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.
Skylift Pty Ltd applied for a TCO in respect of certain upper body exercise equipment on 04 December 2008.
Instrument
TCO No 0842699 was made on 27 February 2009. It declares that those certain upper body exercise equipment 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. 0842699 is taken to have come into force on 04 December 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. 0842699, enacted in 2009 under the Customs Act 1901, addresses the gap in tariff concessions for certain upper body exercise equipment by providing a lower rate of customs duty for these goods. This instrument was introduced to facilitate trade and to support local businesses by ensuring that such goods can be imported without incurring the higher general tariff rates. The Customs Act 1901 allows the Chief Executive Officer of Customs to make Tariff Concession Orders if certain criteria are met, such as the absence of substitutable goods produced in Australia. In this case, the CEO determined that no substitutable goods were produced domestically, thus meeting the core criteria. The instrument effectively reduces the duty rate from 5% to free, benefiting importers and encouraging the import of these goods.
Scope and Application
The Tariff Concession Instrument No. 0842699, made under the Customs Act 1901, applies to the import of certain upper body exercise equipment into Australia, which is subject to a lower rate of customs duty as specified in the Customs Tariff Act 1995. This instrument was made in response to an application by Skylift Pty Ltd, and it became effective from the date the application was lodged, 04 December 2008. The instrument declares that these particular exercise equipment are subject to item 50 of Schedule 4 to the Tariff, which reduces the general duty rate of 5% to free, providing tariff concessions to the applicant. The instrument applies to the specified goods and the duty concessions outlined, and it does not affect any pre-existing rights or liabilities of any person other than the Commonwealth. The CEO of Customs must ensure that no substitutable goods are produced in Australia before approving such tariff concessions, ensuring that the concessions do not undermine local production.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0842699 under the Customs Act 1901 (section 269P(3)) declare that certain upper body exercise equipment are goods to which item 50 of Schedule 4 to the Customs Tariff Act 1995 applies, effectively granting these goods a free rate of customs duty (section 269P(3)). This declaration was made on 27 February 2009, following an application by Skylift Pty Ltd on 04 December 2008. The instrument came into effect on the date of the application, 04 December 2008, and does not affect the rights of any person in relation to actions taken before this date (subsection 269S(1)).
Under this legislation, the Chief Executive Officer of Customs (CEO) has the responsibility to ensure that any Tariff Concession Order (TCO) application meets the core criteria outlined in section 269C of the Act. For the application to meet these criteria, it must be demonstrated that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). Additionally, the CEO must publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). In this instance, the CEO did not receive any submissions.
The Act imposes several obligations on the CEO in the process of handling a TCO application. Firstly, the CEO must determine whether the application meets the core criteria, specifically whether no substitutable goods were produced in Australia on the day the application was lodged (section 269C). Secondly, the CEO must publish a notice in the Gazette as soon as practicable after accepting the application as valid, inviting submissions from any interested parties (subsection 269K(1)). Furthermore, if the application meets the core criteria, the CEO is required to make a written order declaring the goods to which the TCO applies (section 269P(3)).
Breach of the provisions of the Customs Act 1901 or the Tariff Concession Instrument No. 0842699 may result in civil or criminal penalties, depending on the nature and severity of the breach. The Act does not specify particular offences or penalties for the non-compliance with TCOs, but general penalties for breaches of the Customs Act include fines and imprisonment. For example, under section 247 of the Act, a person who knowingly imports goods in contravention of the Act may be liable to a penalty of up to 10,000 penalty units or imprisonment for up to 10 years, or both. Additionally, section 251 of the Act imposes penalties for making a false or misleading statement in relation to the importation or exportation of goods, with penalties including fines of up to 22,200 penalty units or imprisonment for up to 10 years, or both.