EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1033581
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.
E String Bags applied for a TCO in respect of certain shopping bags on 22 July 2010.
Instrument
TCO No 1033581 was made on 11 October 2010. It declares that those certain shopping bags 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. 1033581 is taken to have come into force on 22 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 Tariff Concession Instrument No. 1033581 was enacted in 2010 under the Customs Act 1901 to address the need for a lower rate of customs duty on certain goods that are not produced domestically and for which there are no substitutable goods available in Australia. The Customs Act 1901 allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, who must determine whether an application for a TCO meets the specified criteria, including the absence of substitutable goods in Australia. In this instance, E String Bags applied for a TCO on certain shopping bags, and after assessing the application, the CEO issued TCO No. 1033581, effective from 22 July 2010, which lowered the duty on these goods to free, from the general rate of 5%. The policy objective is to encourage the import of goods that are not produced locally, thereby supporting trade and potentially lowering consumer prices.
Scope and Application
The Customs Act 1901, as supplemented by Tariff Concession Instrument No. 1033581, pertains to the granting of Tariff Concession Orders (TCOs) for specific goods, thereby reducing their customs duty. This legislation applies to individuals or entities that seek to import goods that qualify for a tariff concession, provided the goods are not specified in section 269SJ of the Act, which outlines the goods that cannot be subject to a TCO. The Act's application is primarily national, as it operates within the framework of Commonwealth legislation. The geographic reach of the Act is therefore national, affecting all entities importing goods into Australia. The Act does not explicitly exclude any particular person, entity, or industry, but it does specify that no substitutable goods must be produced in Australia for the TCO to be applicable. The process for determining whether an application meets the core criteria involves an assessment by the Chief Executive Officer of Customs, who must be satisfied that the goods are not domestically produced and that there are no substitutable goods available in the Australian market. The Act may extend or restrict its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the applicable duty rates for goods under the concession. The commencement of the TCO is deemed to be the date on which the application for the concession was lodged, as per the relevant subsection of the Customs Act.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 1033581, under the Customs Act 1901, involve the establishment of Tariff Concession Orders (TCOs) (sections 269C, 269F, and 269P(3)). These sections provide the framework for the Chief Executive Officer (CEO) of Customs to assess and grant applications for tariff concessions on specific goods. Section 269C stipulates that a TCO can only be granted if there are no substitutable goods produced in Australia, meaning goods that can replace the ones being applied for in terms of use or design. Section 269F outlines the application process, where any person can apply for a TCO, provided the goods are not specified in section 269SJ, which lists goods that are ineligible for such concessions. If the CEO is satisfied that the application meets the core criteria, they must issue a written order as per section 269P(3), which specifies the tariff item under the Customs Tariff Act 1995 that will apply to the goods in question.
The obligations and requirements imposed by the Act on the parties involved are primarily centred around the application process and the criteria for granting TCOs. For applicants, such as E String Bags in this case, the obligation is to ensure their application meets the core criteria as outlined in section 269C. This includes demonstrating that no substitutable goods are produced in Australia. The CEO of Customs, on the other hand, has the obligation to review the application and make a decision based on the evidence provided, ensuring that all legal and statutory requirements are met. Additionally, the CEO must publish a notice in the Gazette inviting submissions from interested parties, although this does not appear to have been a requirement for this specific TCO as no submissions were received.
Breaching the conditions set out in the Customs Act 1901, or failing to comply with the requirements for a Tariff Concession Order, can lead to various consequences. While the explanatory statement does not explicitly detail offences or penalties for breach, the Act itself may impose civil or criminal penalties for non-compliance with customs regulations. Typically, breaches of the Customs Act can result in fines, penalties, or even imprisonment, depending on the severity and intent of the breach. For instance, providing false information in an application could lead to criminal charges, while failing to comply with the terms of a granted TCO could result in financial penalties or the revocation of the concession. The specific penalties would be determined by the courts based on the nature and extent of the breach.