EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1030674
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.
Deluxe Products Pty Ltd applied for a TCO in respect of certain saunas on 07 July 2010.
Instrument
TCO No 1030674 was made on 29 September 2010. It declares that those certain saunas 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. 1030674 is taken to have come into force on 07 July 2010.
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 Australian Parliament, provides a framework for administering customs and excise duties. Specifically, Part XVA of the Act allows for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at providing lower rates of customs duty on certain goods. The Act was introduced to address the need for a flexible mechanism to reduce customs duties on specific imported goods, particularly when those goods are not produced domestically. Deluxe Products Pty Ltd sought a TCO for certain saunas, which was subsequently granted as no substitutable goods were being produced in Australia, aligning with the core criteria set out in section 269C of the Act. This instrument, TCO No. 1030674, was made on 29 September 2010, and it declared that the specified saunas are subject to a duty rate of free, down from the general rate of 5%. The policy objective is to support importers by reducing duty burdens, thereby potentially lowering the cost of imported goods and facilitating trade.
Scope and Application
The Tariff Concession Instrument No. 1030674 applies to goods that are the subject of a Tariff Concession Order (TCO) under Part XVA of the Customs Act 1901. Specifically, this instrument relates to certain saunas for which Deluxe Products Pty Ltd applied for a TCO on 07 July 2010. The instrument is applicable to the goods specified within it and is intended to provide a concessional rate of customs duty, which in this case is reduced from the general rate of 5% to free, provided that no substitutable goods were produced in Australia on the day the application was lodged. The instrument operates within the geographic and jurisdictional reach of the Commonwealth of Australia and extends to the customs duties outlined in Schedule 4 of the Customs Tariff Act 1995. The Act ensures that the application of the TCO does not disadvantage any person other than the Commonwealth nor impose liabilities on any person for actions taken prior to the registration of the TCO. Furthermore, the instrument can be extended or restricted through subordinate instruments as per the provisions of the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The Tariff Concession Instrument No. 1030674 under the Customs Act 1901 (section 269F) allows for the application of a lower rate of customs duty to specific goods. When an entity, such as Deluxe Products Pty Ltd, applies for a Tariff Concession Order (TCO) in relation to certain goods, the Chief Executive Officer of Customs (CEO) evaluates the application to determine if it meets the core criteria outlined in section 269C. This assessment involves verifying that no substitutable goods were produced in Australia on the date the application was lodged (section 269D and 269E). If the CEO is satisfied that the application meets these criteria, a written order is issued, declaring the goods to which the concession applies (section 269P(3)). In this instance, Deluxe Products Pty Ltd's application for a TCO in respect of certain saunas was successful, resulting in the CEO issuing TCO No. 1030674 on 29 September 2010.
The obligations imposed by this Act on the parties involve a rigorous application process and assessment by the CEO. When an entity submits an application for a TCO, it must provide sufficient information to enable the CEO to determine if the core criteria are met. The CEO has a duty to publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the TCO should not be made (subsection 269K(1)). Additionally, the CEO must ensure that the TCO does not disadvantage any person or impose liabilities on any person in relation to actions taken before the TCO was registered (subsection 269S(1)). Importers, however, benefit from this process as they may apply for a refund of duty on goods imported since the TCO came into effect.
Breach of the conditions set out in the Customs Act 1901 can lead to civil or criminal consequences. Although the explanatory statement does not specify the exact nature of the offences, penalties, or consequences, it is understood that non-compliance with the requirements could result in legal action. The maximum penalties for breaches under the Customs Act can vary widely, but typically include fines and imprisonment, depending on the severity of the breach. For instance, under section 269 of the Act, penalties for making false or misleading statements in an application could result in significant fines and/or imprisonment terms as prescribed by the Act.