EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0946654
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.
Hermes Australia applied for a TCO in respect of certain leather handbags on 01 December 2009.
Instrument
TCO No 0946654 was made on 05 February 2010. It declares that those certain leather handbags 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. 0946654 is taken to have come into force on 01 December 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 Tariff Concession Instrument No. 0946654 was enacted in 2010 under the Customs Act 1901 to address the need for a streamlined process to grant tariff concessions on specific imported goods, in this case certain leather handbags. The instrument was introduced to facilitate the application and approval of Tariff Concession Orders (TCOs) that can reduce the customs duty on certain imported goods. The Customs Act 1901 provides a legislative framework under which the CEO of Customs can make such orders if certain criteria are met. This particular instrument was made to assist Hermes Australia, which applied for a tariff concession on certain leather handbags, to alleviate the financial burden on importers by allowing them to import these goods duty-free. The policy objective is to ensure that the application process for tariff concessions is both effective and responsive to the needs of businesses importing specific goods.
Scope and Application
The Customs Act 1901, specifically under Part XVA, outlines a framework whereby the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) that provide lower rates of customs duty on specified goods. This Act applies to individuals and entities that are seeking tariff concessions for goods imported into Australia. The application of TCOs is contingent upon the goods not being specified in section 269SJ of the Act, which excludes certain goods from the concession scheme, and upon meeting the core criteria as defined in sections 269C, 269D, and 269E. These sections collectively determine whether substitutable goods are being produced in Australia in the ordinary course of business. The Act's application extends nationally, and it does not disadvantage any person, including importers, who have rights as of the date of the TCO's registration. Furthermore, the Act allows for the TCO to be extended or restricted through subordinate instruments, although no such instruments are mentioned in the explanatory statement for TCO No. 0946654. This particular TCO, made on 05 February 2010, applies to certain leather handbags and reduces their customs duty rate to free, which was the rate effective from 01 December 2009, the date the application was lodged.
Key Provisions
The Customs Act 1901, specifically under Part XVA, outlines a process whereby the Chief Executive Officer of Customs (CEO) can grant Tariff Concession Orders (TCOs) for certain goods, as outlined in section 269F. For a TCO to be considered, an applicant must submit an application to the CEO, who then assesses whether the application meets the core criteria, as per section 269C. If the CEO determines that the application does not pertain to goods specified in section 269SJ, and that no substitutable goods were produced in Australia on the date the application was lodged, they are obligated to issue a TCO. This is stipulated under section 269P(3) of the Act, which mandates the creation of a written order declaring the goods eligible for a prescribed tariff concession as detailed in Schedule 4 of the Customs Tariff Act 1995.
The obligations imposed by the Act on the CEO include evaluating the validity of TCO applications, determining if the goods in question are substitutable by Australian-made products, and publishing a notice in the Gazette inviting submissions from interested parties, as per subsection 269K(1). The CEO is also required to ensure that the TCO does not disadvantage any person, except the Commonwealth, or impose liabilities on any person, other than the Commonwealth, in respect of actions taken prior to the TCO’s registration. Section 269S(1) specifies that the TCO takes effect from the date the application was lodged, which in this instance is 1 December 2009.
In terms of penalties and consequences, the Act does not explicitly state any offences or penalties for breaches related to TCOs. However, it is implicit that non-compliance with the provisions governing TCOs could lead to legal repercussions, including potential civil or criminal penalties as prescribed under other sections of the Customs Act 1901 or related regulations. It is essential for applicants and the CEO to adhere strictly to the legislative requirements to avoid any adverse outcomes.