EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0937116
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.
McPhersons Consumer Products applied for a TCO in respect of certain skipping ropes on 01 October 2009.
Instrument
TCO No 0937116 was made on 30 December 2009. It declares that those certain skipping ropes 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. 0937116 is taken to have come into force on 01 October 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 was enacted to facilitate international trade by regulating the import and export of goods, including the imposition of customs duties. The Act provides for Tariff Concession Orders (TCOs) under Part XVA, which allow for a lower rate of customs duty on specified goods. This legislative instrument, F2010L01125, was introduced to address the need for tariff concessions on certain imported goods. The Chief Executive Officer of Customs has the authority to make TCOs under section 269F of the Act, provided the application meets the core criteria set out in section 269C, which includes the condition that no substitutable goods are produced in Australia. McPhersons Consumer Products applied for a TCO for certain skipping ropes on 1 October 2009, and the instrument, TCO No. 0937116, was made on 30 December 2009, effective from the date of application. This concession reduces the duty rate from the general rate of 5% to free duty for the specified skipping ropes. The CEO published a notice in the Gazette inviting submissions on the TCO application but did not receive any responses. The policy objective of this instrument is to facilitate the importation of specified goods by reducing the applicable customs duty, thereby potentially benefiting importers and the broader market.
Scope and Application
The Tariff Concession Instrument No. 0937116, made under the Customs Act 1901, applies to individuals and entities that import skipping ropes specified within the instrument. It is a Commonwealth instrument, thus extending its reach across the entirety of Australia. The instrument facilitates a concession on customs duty for certain skipping ropes, provided that these goods are not substitutable by products manufactured within Australia and meet the criteria outlined in the Customs Act 1901. The application of the tariff concession order (TCO) is contingent on satisfying the conditions stipulated in sections 269C and 269P of the Act. Notably, the instrument does not disadvantage any persons other than the Commonwealth and does not impose any liabilities on individuals or entities for actions taken prior to its enactment. Subordinate instruments may further specify or extend the application of the TCO, although none are mentioned in the explanatory statement.
Key Provisions
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs, which are aimed at applying a lower rate of customs duty to particular goods (section 269F). For an application to be considered, it must not pertain to goods explicitly listed in section 269SJ of the Act, which excludes certain goods from TCO eligibility. The CEO evaluates the application against the core criteria outlined in section 269C, which requires that on the date of the application, no substitutable goods were produced in Australia in the ordinary course of business. The definitions of 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are further elaborated in sections 269D, 269E, and 269F respectively. If the CEO determines that the application meets these criteria, they are mandated to issue a written TCO (subsection 269P(3)).
The obligations imposed by the Customs Act 1901 on parties or entities under the TCO scheme are primarily centred around the application process and the CEO's decision-making responsibilities. The Act requires that the CEO must assess the validity of the TCO application against the core criteria, and if satisfied, issue a TCO. Additionally, the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested party to submit reasons why the TCO should not be made (subsection 269K(1)). McPhersons Consumer Products, in this instance, applied for a TCO for certain skipping ropes on 1 October 2009. TCO No. 0937116 was issued on 30 December 2009, declaring that the specified skipping ropes are subject to item 50 of Schedule 4 of the Customs Tariff Act 1995, with the duty rate for these goods set at free, down from the general rate of 5%.
Should there be any breaches of the conditions set out in the TCO, or if there is non-compliance with the obligations stipulated in the Customs Act 1901, the consequences can be significant. While the explanatory statement does not explicitly outline the penalties for non-compliance, under Australian law, breaches of customs regulations can result in both civil and criminal penalties. Civil penalties can include fines, and in severe cases, criminal penalties such as imprisonment may apply, depending on the nature and severity of the breach. The specific penalties would be determined by the relevant provisions of the Customs Act 1901 and any associated regulations.