EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1050329
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 play tents on 15 November 2010.
Instrument
TCO No 1050329 was made on 07 February 2011. It declares that those certain play 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. 1050329 is taken to have come into force on 15 November 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 was enacted by the Parliament of Australia to regulate the importation and exportation of goods, among other things. This Act provides the framework for the creation of Tariff Concession Orders (TCOs) to provide relief from customs duty on certain goods, thereby facilitating trade. The Tariff Concession Instrument No. 1050329, issued under the authority of the Customs Act 1901, addresses the gap by providing a lower rate of customs duty on specific play tents, responding to an application by Kmart Australia Ltd. The policy objective is to reduce the financial burden on importers by offering tariff concessions when no substitutable goods are produced in Australia, thus promoting competitive and efficient trade practices.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) through the authority of the Chief Executive Officer of Customs. This legislation applies to individuals and entities seeking a reduction in customs duty on imported goods through the application process outlined in section 269F. A TCO can be applied for by any person, provided the goods in question do not fall under the exclusions specified in section 269SJ. The process hinges on the CEO determining whether the application meets the core criteria, notably that no substitutable goods are produced in Australia, as defined by sections 269C, 269D, and 269E. Should the CEO approve an application, they are required to issue a TCO that specifies the applicable duty rate under the Customs Tariff Act 1995. The legislation operates nationally across Australia, with the CEO's decisions impacting the importation process directly. Notably, the TCO does not affect existing rights or impose new liabilities on any person other than the Commonwealth, thereby safeguarding the interests of importers who may benefit from duty refunds for imports made since the TCO's effective date.
Key Provisions
The Customs Act 1901, particularly under Part XVA, sets out the framework for Tariff Concession Orders (TCOs), which apply lower rates of customs duty to specified goods. Section 269F allows individuals or entities to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning certain goods. To be eligible, the goods must not be specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the CEO determines that the application meets the core criteria, outlined in section 269C, a TCO is issued. This core criterion necessitates that, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Definitions for "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively. If the CEO is satisfied that these criteria are met, they must issue a written order, as stipulated in section 269P(3), applying a prescribed rate of duty from Schedule 4 of the Customs Tariff Act 1995 to the goods in question.
Entities such as Kmart Australia Ltd that apply for a TCO must ensure that their application is made under the proper sections of the Act and that they adhere to all conditions set out therein. In the case of Kmart Australia Ltd, they applied for a TCO for certain play tents on 15 November 2010. The CEO issued TCO No. 1050329 on 07 February 2011, declaring that these play tents are subject to a free rate of duty, as no substitutable goods were produced in Australia. This process ensures that the general rate of duty, which is 5%, is not applied to these goods.
The Act imposes several obligations on the CEO and applicants for a TCO. The CEO must publish a notice in the Gazette, as required by subsection 269K(1), inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. In the case of Kmart Australia Ltd, the CEO did not receive any submissions in response to this invitation. Additionally, the TCO is considered to come into force on the day the application was lodged, as per subsection 269S(1). TCO No. 1050329 is taken to have come into force on 15 November 2010. Importantly, the TCO does not affect the rights of any person other than the Commonwealth or impose any liabilities on any person in respect of actions taken before the date of registration.
Failure to comply with the requirements of the Customs Act 1901 concerning TCOs can result in significant consequences. While the Act does not explicitly detail offences, penalties, or consequences for breach, any deviation from the prescribed processes or failure to adhere to the conditions set out in the Act may lead to legal action. For instance, if a TCO is issued improperly, it could be subject to judicial review or revocation. The consequences of such actions could include financial penalties or the need to pay back any duty benefits improperly received. Additionally, there may be reputational damage to the entities involved, which could have broader commercial implications.