EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1045786
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.
Anaconda Stores applied for a TCO in respect of certain camping tents on 11 October 2010.
Instrument
TCO No 1045786 was made on 28 March 2011. It declares that those certain camping tents 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. 1045786 is taken to have come into force on 11 October 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 duties, including the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) that lower the duty rate on specified goods. This mechanism aims to address the problem of ensuring that certain goods, which are not produced in Australia, can be imported without the usual customs duty burden, thereby promoting trade and potentially reducing costs for consumers. The Explanatory Statement for Tariff Concession Instrument No. 1045786, which was issued on 28 March 2011, details a TCO application by Anaconda Stores for certain camping tents, where the duty rate was reduced from 5% to free. This concession was granted after satisfying the core criteria, including the absence of substitutable goods produced in Australia, and follows a period of public consultation with no objections. The TCO is effective from the date of the application, 11 October 2010, and does not retroactively affect the rights or impose liabilities on any parties other than the Commonwealth.
Scope and Application
The Customs Act 1901, through Tariff Concession Orders (TCOs), provides a framework for the Chief Executive Officer of Customs to grant tariff concessions on imported goods, effectively lowering the customs duty rate for certain goods if specific criteria are met. This Act applies to any individual or entity that imports goods into Australia and seeks a tariff concession. The geographic scope of the Act is national, as it pertains to customs duties across Australia. The application of a TCO is contingent on the CEO being satisfied that no substitutable goods are produced in Australia in the ordinary course of business, as defined under sections 269D, 269E, and 269F of the Act. TCOs do not apply to goods specified in section 269SJ of the Act. The Act may extend its application through subordinate instruments, such as the Customs Tariff Act 1995, which details the specific tariff items and their rates. In the case of Anaconda Stores, a TCO was granted for certain camping tents, effectively setting their customs duty rate to zero, provided the goods were imported after the application date of 11 October 2010.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically as they relate to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269P, and 269S. Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C stipulates that a TCO application meets the core criteria if, on the day of application, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) mandates that if the CEO is satisfied the application meets these criteria, a written order must be made declaring the goods subject to a lower rate of customs duty. Section 269S explains that a TCO is to be taken as coming into force on the day the application was lodged.
The Customs Act imposes several obligations and requirements on both the CEO and applicants for TCOs. The CEO must ensure that the application for a TCO does not pertain to goods specified in section 269SJ, which lists goods that cannot be subject to a TCO. Furthermore, the CEO is required to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made, as per subsection 269K(1). This ensures transparency and provides an opportunity for public input. Additionally, the CEO must determine whether the application meets the core criteria, specifically whether no substitutable goods were produced in Australia on the application date.
Breaching the provisions of the Customs Act in relation to TCOs may result in both civil and criminal consequences. Civil penalties can include financial penalties or fines for non-compliance with the Act. Criminal penalties may apply for more severe breaches and could involve imprisonment or significant fines, depending on the nature and severity of the offence. The maximum penalties are not specified in the Explanatory Statement but would typically be determined by the relevant provisions of the Customs Act and associated regulations.
The TCO No. 1045786, made on 28 March 2011, specifically relates to certain camping tents, applying item 50 of Schedule 4 to the Customs Tariff Act 1995. This means that the general rate of duty on these goods, which is 5%, is reduced to free. The TCO does not affect any rights of persons other than the Commonwealth, ensuring that it does not disadvantage or impose liabilities on others for actions taken before the TCO's effective date. Importers benefit from this concession as they can apply for a refund of duty on goods imported since the TCO's effective date, 11 October 2010, under paragraph 126(1)(r) of the Regulations.