EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043969
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.
Sticky Wicky Pty Ltd applied for a TCO in respect of certain childrens cricket sets on 27 September 2010.
Instrument
TCO No 1043969 was made on 20 December 2010. It declares that those certain childrens cricket 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. 1043969 is taken to have come into force on 27 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 Customs Act 1901, enacted by the Parliament of Australia, establishes a framework for the regulation of customs and excise duties, amongst other things. The Act includes a provision for Tariff Concession Orders (TCOs) under Part XVA, enabling the Chief Executive Officer of Customs to reduce or eliminate customs duty on certain goods. This mechanism was introduced to address economic challenges by allowing for tariff concessions where specific criteria are met, thus potentially aiding Australian businesses by lowering the cost of importing certain goods. The Explanatory Statement for Tariff Concession Instrument No. 1043969, which pertains to a TCO for children's cricket sets, demonstrates the process by which the CEO assesses and approves applications based on the absence of substitutable goods produced in Australia. This particular instrument was introduced without any objections, reflecting the policy objective of facilitating trade while ensuring no undue disadvantage to existing rights or imposition of new liabilities.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs) under Part XVA, facilitates the application for a lower rate of customs duty on specific goods, provided these goods are not already produced in Australia and no suitable substitutes exist. This mechanism allows entities such as Sticky Wicky Pty Ltd to apply for tariff concessions, which, if approved by the Chief Executive Officer of Customs, result in the designated goods being subject to a zero rate of duty instead of the standard rate. The application process requires public notification, inviting any interested party to challenge the application on specified grounds, although no such submissions were received in this instance. The TCO applies from the date the application is lodged, meaning it retroactively benefits the rights of importers regarding duties already paid on the goods. Importantly, the TCO does not affect the legal rights of any person, other than the Commonwealth, in respect of actions taken prior to the order's registration, nor does it impose any new liabilities on individuals or entities.
Key Provisions
The Customs Act 1901, through its Part XVA, provides a mechanism for the Chief Executive Officer of Customs (CEO) to issue Tariff Concession Orders (TCOs) that reduce customs duty on certain goods. If a person applies for a TCO under section 269F and the CEO determines that the application is not in respect of goods specified in section 269SJ, the CEO must assess whether the application meets the core criteria. This assessment hinges on whether, on the day the application was lodged, no substitutable goods were being produced in Australia in the ordinary course of business, as defined by sections 269C, 269D, and 269E of the Act. If the application satisfies these criteria, the CEO must issue a written TCO (section 269P(3)) specifying that the goods are subject to a particular item of Schedule 4 in the Customs Tariff Act 1995, effectively applying a reduced or free duty rate.
Entities such as Sticky Wicky Pty Ltd, who apply for a TCO, must ensure their application complies with the statutory requirements, including providing sufficient evidence that no substitutable goods are being produced domestically. The CEO’s obligation is to rigorously evaluate the application against the core criteria and to publish a notice in the Gazette inviting any interested parties to submit objections if they believe the TCO should not proceed. In the case of TCO No. 1043969, the CEO did not receive any objections, thereby permitting the issuance of the order. The TCO will take effect from the date the application was lodged, in this instance, 27 September 2010. It is important to note that this order does not affect the rights of any person other than the Commonwealth in relation to actions taken before the TCO was registered.
Non-compliance with the Act's requirements or misuse of the TCO provisions can result in legal consequences. The Act does not specify particular offences or penalties for breaching the TCO provisions; however, general provisions within the Customs Act 1901 may apply. These could include administrative penalties for incorrect declarations or fraudulent activities, with potential civil or criminal penalties for more serious breaches. The specific penalties would depend on the nature and severity of the breach, but they could range from fines to imprisonment, depending on the context and the discretion of the court.