EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1042050
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.
Palcove applied for a TCO in respect of certain lanterns on 13 September 2010.
Instrument
TCO No 1042050 was made on 06 December 2010. It declares that those certain lanterns 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. 1042050 is taken to have come into force on 13 September 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. 1042050, enacted in 2010, operates under the Customs Act 1901 to provide relief on customs duty for specific goods, in this case certain lanterns, which were the subject of an application by Palcove. This instrument was introduced to address the gap in duty relief for goods that do not have substitutable Australian-made alternatives. The instrument allows for a lower rate of customs duty, or in this instance, a free rate, for the specified goods, provided that the core criteria of the Customs Act are met, specifically that no substitutable goods were produced in Australia in the ordinary course of business at the time of the application. This legislative measure was enacted by the Chief Executive Officer of Customs in response to a valid application and following a consultation period during which no objections were received.
The Tariff Concession Order (TCO) No. 1042050 was published in the Gazette, inviting public submissions, none of which were received. The TCO came into force on the date the application was lodged, which was 13 September 2010. This legislative action ensures that importers of the specified lanterns are eligible for a refund of duty on goods imported since the effective date of the TCO, thereby providing a benefit to the rights of importers without imposing any liabilities or disadvantaging any person.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) provisions, provides a framework for granting lower customs duty rates on specified goods, subject to certain conditions. This framework applies to individuals or entities that apply for a TCO concerning particular goods not listed in section 269SJ of the Act, which excludes certain goods from eligibility for tariff concessions. The scope of this Act extends to any person who can demonstrate that no substitutable goods are produced in Australia, as defined under sections 269D and 269E of the Act. The geographic and jurisdictional reach of the Act is national, as it applies across Australia under the Commonwealth's legislative authority. The Act does not disadvantage any person by affecting their rights as at the date of registration, nor does it impose liabilities on individuals or entities for actions taken prior to the TCO's effective date. The TCO in question, No. 1042050, was applied to certain lanterns, resulting in a reduction of duty from 5% to free, effective from the date the application was lodged, 13 September 2010.
Key Provisions
The key provisions of the Tariff Concession Instrument No. 1042050, made under the Customs Act 1901, revolve around the creation of a Tariff Concession Order (TCO) for specific lanterns, as applied for by Palcove on 13 September 2010. The CEO of Customs was satisfied that no substitutable goods were produced in Australia at the time of the application, and therefore, the TCO was issued on 6 December 2010, applying item 50 of Schedule 4 to the Customs Tariff Act 1995. This means that the lanterns in question now benefit from a zero duty rate, down from the general rate of 5% (sections 269C, 269D, 269E and 269P(3)). The TCO came into effect on the date of the application, 13 September 2010, and does not affect any existing rights or impose new liabilities on any person other than the Commonwealth (subsection 269S(1)).
The Customs Act 1901 imposes certain obligations on the CEO of Customs in the context of issuing TCOs. When an application is received, the CEO must first determine if it pertains to goods that cannot be subject to a TCO, as outlined in section 269SJ. If the application is valid, the CEO must then assess whether it meets the core criteria set out in section 269C, which requires that no substitutable goods were produced in Australia on the application date. Additionally, under subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties who may have objections to the TCO. If no submissions are received, the CEO can proceed to issue the TCO (subsection 269S(1)).
Failure to comply with the obligations set out in the Customs Act 1901 can result in legal consequences. While the Act does not specify particular offences related to TCOs, breaches of the Act generally can lead to criminal or civil penalties. For instance, knowingly making a false statement in a customs declaration or providing false information in an application can lead to a penalty of up to five times the value of the goods or AUD 55,000, whichever is greater (section 238A). Similarly, contravening a TCO or making a false statement in relation to a TCO may attract penalties under the Crimes Act 1914 or the Criminal Code Act 1995, including fines and imprisonment. The exact penalties would depend on the nature and severity of the breach.