EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1032319
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 on 15 July 2010.
Instrument
TCO No 1032319 was made on 25 October 2010. It declares that those certain led christmas lights 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. 1032319 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 Parliament of Australia, provides a framework for the regulation of customs and excise in Australia. The Act establishes mechanisms for the imposition of customs duty on imported goods and allows for the creation of Tariff Concession Orders (TCOs) to reduce or eliminate customs duty on certain goods under specific circumstances. TCOs are designed to address instances where no suitable Australian-made alternatives exist for imported goods, thereby promoting fair competition and potentially lowering costs for consumers. The explanatory statement for Tariff Concession Instrument No. 1032319 indicates that this particular instrument was introduced to provide tariff concessions for certain LED Christmas lights, as applied for by Kmart Australia Ltd on 15 July 2010. The Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, satisfying the core criteria for a TCO. This decision led to the issuance of TCO No. 1032319 on 25 October 2010, which set the duty on the specified LED Christmas lights to zero, down from the general rate of 5%.
Scope and Application
The Customs Act 1901, as supplemented by Tariff Concession Instrument No. 1032319, applies to the application process for tariff concessions concerning specific goods, in this case, certain LED Christmas lights, and pertains to entities such as Kmart Australia Ltd that seek to benefit from reduced customs duties. This instrument provides the legal framework for the CEO of Customs to grant tariff concessions, allowing the specified goods to be subject to a lower rate of customs duty if certain conditions are met. The instrument operates within the Commonwealth jurisdiction and has no exclusions or exemptions beyond those set out in the Customs Act 1901, such as goods listed in section 269SJ that cannot be subject to a TCO. The application process also includes a public consultation phase, inviting submissions from interested parties, although no submissions were received for this particular TCO. The tariff concession order is effective from the date the application was lodged, and it does not retroactively disadvantage any party or impose new liabilities, but it does entitle importers to apply for duty refunds on goods imported after the effective date.
Key Provisions
The Customs Act 1901 (the Act) includes provisions that allow for the creation of Tariff Concession Orders (TCOs) under section 269F. These orders can reduce the customs duty on certain goods. Specifically, section 269C stipulates that a TCO application meets the core criteria if, on the day the application is lodged, no substitutable goods were produced in Australia in the ordinary course of business. Additionally, section 269P(3) mandates that if the Chief Executive Officer of Customs (the CEO) is satisfied the application meets these criteria, they must issue a written TCO.
Entities applying for a TCO, such as Kmart Australia Ltd in this case, must ensure their application satisfies the conditions outlined in the Act. The CEO must then publish a notice in the Gazette, inviting any person who believes the TCO should not be granted to submit their views. In this instance, no submissions were received, indicating broad acceptance of the TCO's terms.
The TCO itself, in this case TCO No. 1032319, applies to certain LED Christmas lights, declaring them subject to a specific item in Schedule 4 of the Customs Tariff Act 1995. The TCO was made effective from 15 July 2010, the date the application was lodged, and it reduces the duty on these goods from the general rate of 5% to free. Importantly, the TCO does not affect any existing rights or impose new liabilities on parties other than the Commonwealth.
Breach of the provisions within the Customs Act, including the misuse of a TCO, could result in legal consequences. While the explanatory statement does not detail specific penalties, under Australian law, penalties for customs-related offences can include substantial fines and, in severe cases, imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as any applicable regulations or subsequent legislation.