EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0910603
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.
Pacific Brands Groups applied for a TCO in respect of certain bicycle trainers on 30 March 2009.
Instrument
TCO No 0910603 was made on 19 June 2009. It declares that those certain bicycle trainers 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. 0910603 is taken to have come into force on 30 March 2009.
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 for the administration of customs duties and the regulation of imports and exports. The Act was introduced to address the need for a structured approach to customs duties and the regulation of trade, ensuring both revenue generation for the government and the facilitation of international trade. Part XVA of the Act outlines a scheme under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO), allowing for lower rates of customs duty on certain goods. This mechanism aims to support industries by reducing costs and enhancing competitiveness without compromising the government's revenue needs. In 2009, Instrument TCO No. 0910603 was issued in response to an application from Pacific Brands Group for certain bicycle trainers, effectively setting the duty rate at zero, down from the general rate of 5%, thereby providing relief to the importer and potentially lowering consumer prices.
Scope and Application
The Tariff Concession Instrument No. 0910603 under the Customs Act 1901 applies to persons or entities that have applied for and been granted a Tariff Concession Order (TCO) for specified goods. In this instance, the Act applies to Pacific Brands Group who sought a TCO for certain bicycle trainers. The instrument allows for a lower rate of customs duty on these goods, provided the Chief Executive Officer of Customs is satisfied that no substitutable goods are produced in Australia. The geographic reach of this legislation is national, applying across Australia as it is an instrument under the Commonwealth's Customs Act. The Act does not explicitly state any exclusions or exemptions beyond the goods that cannot be subject to a TCO as outlined in section 269SJ. The Act provides that subordinate instruments may extend or restrict application, although in this specific case, no such instruments have been referenced. The commencement of the TCO is effective from the date the application was lodged, in this case, 30 March 2009.
Key Provisions
The main operative sections of this legislation (Tariff Concession Instrument No. 0910603) include sections 269F, 269C, 269B, and 269P(3) of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the application meets the core criteria set out in section 269C, the CEO must make a written order (section 269P(3)) that declares the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The core criteria, defined in section 269C, require that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, where "substitutable goods" are defined in section 269B. In this case, the CEO found that the application met the core criteria, and a TCO was issued for certain bicycle trainers, reducing their customs duty rate from 5% to free.
The Act imposes several obligations on parties involved in the process. Firstly, the CEO must ensure that the application does not pertain to goods specified in section 269SJ of the Act, which are ineligible for TCOs. If the application passes this initial check, the CEO must determine if it meets the core criteria. Once a TCO is issued, the CEO must also publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any person who believes the TCO should not be made. In this case, no submissions were received. Furthermore, the Act ensures that the TCO does not disadvantage any person or impose liabilities for actions taken before the TCO was issued.
The Act provides for potential consequences if its provisions are breached. However, the Explanatory Statement does not detail specific offences or penalties for breaches related to the TCO process itself. It does note that the TCO does not impose any liabilities on any person, and it beneficially affects the rights of importers who can apply for a refund of duty on goods imported since the TCO came into force. For broader breaches of the Customs Act 1901, penalties could include fines and imprisonment, but these are not specified in the context of this particular TCO. The focus here is on the procedural correctness and the benefits provided to importers through the concession order.