EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1109850
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.
Target Australia applied for a TCO in respect of certain sleeping bag sets on 22 March 2011.
Instrument
TCO No 1109850 was made on 20 June 2011. It declares that those certain sleeping bag 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. 1109850 is taken to have come into force on 22 March 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 was amended to facilitate the introduction of Tariff Concession Orders (TCOs) through the Tariff Concession Instrument No. 1109850, enacted in 2011. This instrument was created to address the need for a streamlined process to reduce customs duties on specific imported goods, thereby enhancing trade efficiency and competitiveness. The instrument was developed by the Chief Executive Officer of Customs in accordance with section 269F of the Act, following an application from Target Australia for tariff concessions on certain sleeping bag sets. The application was assessed under section 269C, which stipulates that a TCO can be granted if no substitutable goods are produced in Australia. As a result, the CEO determined that the sleeping bag sets qualified for the concession, leading to the issuance of TCO No. 1109850, which took effect from 22 March 2011. The TCO exempts these specific sleeping bag sets from the general duty rate of 5%, setting their duty rate to free. This initiative was designed to benefit importers by potentially allowing them to claim refunds for duties paid on imports of these goods since the TCO's effective date, without imposing any new liabilities on third parties.
Scope and Application
The Tariff Concession Instrument No. 1109850 is a regulation under Part XVA of the Customs Act 1901, which pertains to Tariff Concession Orders (TCOs) that can be made by the Chief Executive Officer of Customs (CEO). This Act applies to individuals or entities that seek a reduction in customs duty for goods through the application of a TCO, provided the goods are not specified as excluded in section 269SJ of the Act. The primary objective of the legislation is to facilitate the reduction of customs duty on specified goods if certain criteria are met, specifically if no substitutable goods are produced in Australia. The application of this Act is limited to the Commonwealth jurisdiction and applies to goods that are subject to the Customs Tariff Act 1995. The CEO has the discretion to grant a TCO if satisfied that the application meets the core criteria and after inviting and considering any submissions from interested parties. This regulation came into effect on the date the application was lodged, which in this case was 22 March 2011, and it does not retroactively affect any pre-existing rights or impose liabilities on any person regarding actions taken prior to its enactment.
Key Provisions
The Customs Act 1901 (the Act) is central to the regulation of customs duty in Australia, and includes provisions for Tariff Concession Orders (TCOs) under Part XVA. Section 269F allows for applications to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of specific goods. If the CEO determines that the application meets the core criteria, outlined in section 269C, they must issue a written order declaring that the goods specified in the application are subject to a reduced rate of customs duty. This is contingent upon the CEO being satisfied that no substitutable goods were produced in Australia on the day the application was lodged. The definition of 'substitutable goods' is provided in section 269B and includes goods produced in Australia that can be used in a manner similar to the goods specified in the TCO application.
The obligations imposed by the Act on parties applying for a TCO are primarily centred around ensuring the application meets the core criteria. The applicant must demonstrate that the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Additionally, the CEO has a duty to publish a notice in the Gazette inviting submissions from interested parties if they believe there are reasons why the TCO should not be made. This is stipulated in subsection 269K(1) of the Act. The CEO must consider any submissions received before making a final decision on the TCO application.
The Act and associated regulations outline various consequences for non-compliance or breach. If a person knowingly or negligently provides false or misleading information in an application for a TCO, they may be subject to criminal penalties. Under section 284-5 of the Crimes Act 1914, the maximum penalty for such an offence is 12 months imprisonment or a fine of up to 10,000 penalty units, or both. Additionally, section 269X of the Customs Act 1901 provides for civil penalties, including fines of up to 10,000 penalty units for false statements made in an application for a TCO. These penalties serve to ensure compliance with the requirements of the Act and maintain the integrity of the TCO scheme.