EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1112022
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.
Mattel applied for a TCO in respect of certain dolls on 11 April 2011.
Instrument
TCO No 1112022 was made on 11 July 2011. It declares that those certain dolls 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. 1112022 is taken to have come into force on 11 April 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 introduce the scheme for Tariff Concession Orders (TCOs) under Part XVA, allowing the Chief Executive Officer of Customs to reduce or eliminate customs duties on certain goods. Enacted by the Parliament of Australia, the Act aims to facilitate the import of goods that are not produced domestically, thereby supporting businesses that rely on imported goods for their operations. The Explanatory Statement outlines that TCO No. 1112022 was issued in response to an application by Mattel for tariff concessions on certain dolls, which were granted as no substitutable goods were produced in Australia at the time of the application. This concession allows for the free import of these dolls, reducing the general duty rate of 5% to zero and enhancing the rights of importers to seek duty refunds for imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, through Part XVA, allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that reduce customs duty rates on specified goods. This process applies to individuals or entities that meet the core criteria, which primarily involves ensuring that no substitutable goods are produced in Australia at the time of application. The Act's scope encompasses any goods that can be subject to a TCO, provided they are not those specified in section 269SJ as ineligible. Geographically, the Act applies at the Commonwealth level, affecting all states and territories within Australia. The application of a TCO, such as Tariff Concession Instrument No. 1112022, which provides a duty-free rate for certain dolls, extends across national borders by affecting the importation of these goods. While the Act generally allows for broader application through subordinate instruments, this specific TCO applies only to the specified dolls and does not extend to other goods or entities unless similarly applied for and granted. The Act ensures that no existing rights or liabilities of non-Commonwealth persons are adversely affected by the implementation of a TCO.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to this Tariff Concession Order (TCO) include section 269C (2) which outlines the core criteria for a TCO, section 269F which allows for applications to be made to the Chief Executive Officer (CEO) of Customs, and section 269P (3) which mandates the CEO to issue a written order if the application meets these criteria. The explanatory statement clarifies that a TCO applies a lower rate of customs duty to specified goods, provided that no substitutable goods are produced in Australia on the day the application was lodged. This is further defined by section 269D which details what constitutes 'goods produced in Australia', and section 269E which explains 'ordinary course of business'. Finally, section 269SJ specifies the goods that cannot be subject to a TCO.
The Act imposes several obligations on the parties involved. Firstly, the CEO must determine whether an application for a TCO meets the core criteria set out in section 269C. If the CEO is satisfied that the application meets these criteria and no submissions are received objecting to the TCO, the CEO is required to issue a written order under section 269P (3). Additionally, subsection 269K(1) mandates the CEO to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. In this instance, no submissions were received, allowing the CEO to proceed with issuing the TCO.
The Customs Act 1901 also includes provisions for offences and penalties for breaches related to the TCO. While the explanatory statement does not detail specific penalties, the Act generally provides for both civil and criminal penalties for breaches. These can include fines and imprisonment, depending on the severity of the breach. In cases where the TCO is not correctly applied or if fraudulent claims are made, penalties could be significant. The exact penalties would be determined by the courts based on the circumstances of the breach.
In summary, the operative sections of the Customs Act 1901 provide a framework for the application, assessment, and issuance of TCOs. The obligations of the CEO include assessing applications against the core criteria and publishing notices inviting submissions. Failure to comply with the provisions of the Act, or fraudulent claims, can result in civil or criminal penalties. The explanatory statement for Tariff Concession Instrument No. 1112022 highlights that no objections were received, and the TCO was issued, thereby reducing the customs duty for the specified dolls from 5% to free.