EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1105427
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.
Artique Designs applied for a TCO in respect of certain desk and/or stationary sets on 09 February 2011.
Instrument
TCO No 1105427 was made on 03 May 2011. It declares that those certain desk and/or stationary 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. 1105427 is taken to have come into force on 09 February 2011.
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 under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act was introduced to address the need for a streamlined process to lower customs duty rates on certain imported goods under specific conditions. One such TCO is the Tariff Concession Instrument No. 1105427, issued on 3 May 2011, in response to an application by Artique Designs for a concession on certain desk and/or stationary sets. The primary objective of this legislation, as articulated in the Act, is to ensure that the application of a TCO meets core criteria, particularly that no substitutable goods are produced in Australia, thereby benefiting importers by potentially reducing their duty liabilities and allowing for duty refunds on eligible imports.
Scope and Application
The Tariff Concession Instrument No. 1105427 under the Customs Act 1901 applies specifically to certain desk and stationary sets for which Artique Designs applied on 9 February 2011. This instrument, issued on 3 May 2011, provides tariff concessions for these goods by applying a duty-free rate as specified in item 50 of Schedule 4 to the Customs Tariff Act 1995, which contrasts with the usual 5% general duty rate. This concession applies to entities or individuals importing these specific goods, provided that no substitutable goods are produced in Australia. The instrument's geographic reach is national, operating under the overarching framework of the Customs Act 1901. The application of this TCO is limited to the goods specified in the instrument and does not extend to any other goods or industries unless explicitly covered by a subsequent TCO. The Act does not disadvantage any person other than the Commonwealth and imposes no liabilities on entities or individuals for actions taken prior to the instrument's effective date of 9 February 2011. Any subordinate instruments or further regulations may extend or modify the application of this TCO as needed, but the primary focus remains on the specified goods and the tariff concessions they receive.
Key Provisions
The primary sections relevant to the operation of Tariff Concession Order (TCO) No. 1105427 under the Customs Act 1901 include sections 269C, 269B, 269D, 269E, and 269F (sections 269C, 269B, 269D, 269E, and 269F). These sections outline the process for applying for and granting a TCO, which involves assessing whether the goods in question can be substituted by Australian-produced goods and whether the application meets the core criteria. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets these criteria, a written TCO is issued. In this particular case, the CEO determined that no substitutable goods were produced in Australia for certain desk and/or stationary sets, thus satisfying the core criteria. As a result, TCO No. 1105427 was issued on 03 May 2011, applying a duty rate of free to these goods, down from the general rate of 5%.
The Act imposes several obligations on the parties involved, particularly the applicant and the CEO. For Arque Designs, the applicant, the primary obligation is to submit a valid application under section 269F, ensuring that the application details are accurate and meet the core criteria set out in sections 269C, 269B, 269D, and 269E. The CEO, on the other hand, must review the application to confirm it is not in respect of goods specified in section 269SJ and determine whether the core criteria are met. If satisfied, the CEO must make a written TCO (section 269P(3)) and publish a notice in the Gazette inviting any objections to the TCO (subsection 269K(1)). In this case, no objections were received.
Breaching the requirements set out in the Customs Act 1901 or attempting to circumvent the TCO process could result in legal consequences. While the explanatory statement does not detail specific offences or penalties for breaches related to TCOs, general penalties for breaches of the Customs Act can include fines and imprisonment. For example, section 228 of the Customs Act provides for penalties for making false statements, which can include fines of up to $22,200 or imprisonment for up to two years, or both, for individuals, and higher penalties for corporations. Similarly, subsection 239A(4) outlines that penalties for evading customs duty can result in fines of up to $277,500 or imprisonment for up to 10 years, or both, for individuals, and higher penalties for corporations. It is important for parties to adhere to the requirements and processes stipulated in the Act to avoid these potential consequences.