EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1032318
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.
Kmart Australia Ltd applied for a TCO in respect of certain led christmas lights sets on 15 July 2010.
Instrument
TCO No 1032318 was made on 25 October 2010. It declares that those certain led christmas lights sets 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. 1032318 is taken to have come into force on 15 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, establishes a framework for the administration of customs and excise, including the creation of Tariff Concession Orders (TCOs) to provide tariff relief on certain goods. This legislative instrument, F2011L00796, specifically addresses the problem of providing tariff concessions for particular goods that are not produced domestically, thereby encouraging importation and potentially lowering consumer prices. The Tariff Concession Instrument No. 1032318, made under this Act, was introduced to provide a tariff concession for certain LED Christmas light sets, reducing the customs duty on these goods from 5% to free, effective from the date the application was lodged, 15 July 2010. The policy objective here is to support the importation of goods that are not produced in Australia, thus benefiting consumers and potentially importers who can claim refunds for duties paid prior to the TCO's effective date.
Scope and Application
The Customs Act 1901, through Part XVA and Tariff Concession Orders (TCOs), applies to goods for which an applicant, such as Kmart Australia Ltd in this case, seeks a reduction in customs duty. The application process requires the Chief Executive Officer of Customs to assess whether the goods in question meet the core criteria, specifically whether there are no substitutable goods produced in Australia in the ordinary course of business. If the criteria are met, the CEO must make a written order declaring the goods to which a specific rate of duty applies, as outlined in the Customs Tariff Act 1995. This particular TCO applies to certain LED Christmas light sets, granting them a free rate of duty instead of the general 5% duty. The TCO applies on a Commonwealth level and is effective from the date the application was lodged, in this instance, 15 July 2010. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the effective date of the TCO. There are no stated exclusions or exemptions within this specific TCO, and the CEO must publish a notice in the Gazette inviting submissions on the application, although in this instance, no submissions were received.
Key Provisions
The Customs Act 1901 (the Act) provides a framework for the creation of Tariff Concession Orders (TCOs) as outlined in Part XVA. Section 269F allows any person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of certain goods. If the CEO is satisfied that the application pertains to goods not specified in section 269SJ, which are ineligible for a TCO, the CEO must assess whether the application meets the core criteria set out in section 269C. For a TCO to be issued, it must be established that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
Under the Act, the CEO has certain obligations when handling TCO applications. Once an application is deemed valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. The CEO must then consider any submissions received before making a final decision. In the case of Kmart Australia Ltd's application for a TCO on certain LED Christmas light sets, no submissions were received, allowing the CEO to proceed with issuing the TCO. The TCO, once issued, provides tariff relief for the specified goods, and its effective date is the same as the date the application was lodged, as per subsection 269S(1).
Breaching the conditions set out in the Customs Act 1901 may lead to various civil or criminal consequences. While the Act does not explicitly state penalties for non-compliance, general provisions under the Act may apply, including fines and imprisonment for serious offences. The specifics of penalties would depend on the nature and severity of the breach. The TCO itself ensures that the rights of importers are beneficially affected and allows for duty refunds on goods imported since the TCO's effective date. Importantly, the TCO does not impose any liabilities on any person for actions taken before its registration, ensuring that no one is disadvantaged by its application.