Overview

The Customs Act 1901, enacted by the Commonwealth Parliament, established a framework for the administration of customs duties and the regulation of the import and export of goods. The Act includes provisions for Tariff Concession Orders (TCOs) which allow for the application of reduced customs duties on specific goods, provided certain criteria are met. The problem or gap this legislation addresses is the potential for reduced customs duties on specific imported goods when no substitutable goods are produced in Australia, thereby supporting Australian industry and trade. The explanatory statement outlines the process for applying for and making a TCO, detailing that Kathmandu Pty Ltd applied for and was granted a TCO on certain bags, resulting in a free rate of duty on these goods starting from the date of the application. The statement also confirms that no submissions were received in opposition to the TCO, and that the order does not disadvantage any person or impose liabilities on anyone in respect of actions taken before the TCO's effective date.

Scope and Application

The Customs Act 1901, specifically under Part XVA, enables the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) which provide for lower rates of customs duty on specified goods. These orders apply to entities or individuals seeking a reduction in customs duty for goods not produced in Australia in the ordinary course of business, provided the goods are not listed in section 269SJ of the Act as ineligible for such concessions. The TCO process applies nationally, as it falls under the Commonwealth jurisdiction. A TCO application is considered valid if no substitutable goods are produced in Australia, as defined by sections 269D and 269E of the Act. For instance, Kathmandu Pty Ltd successfully applied for a TCO on certain bags, which now attract a duty rate of free, down from the general rate of 5%. The TCO mechanism includes a public consultation period where objections to the concession can be raised, although in the case of TCO No. 1120775, no such objections were received. The TCO takes effect from the date the application was lodged, ensuring no retroactive liabilities or disadvantages to persons other than the Commonwealth. The scope of this legislation is further extended through subordinate instruments, which may specify additional criteria or procedures for TCO applications.

Key Provisions

The Customs Act 1901 establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (CEO) (section 269F). A lower rate of customs duty applies to goods that are the subject of a TCO (Part XVA). For an application to be considered, it must not be in respect of goods specified in section 269SJ, which lists those goods that cannot be subject to a TCO. If the application is valid, the CEO must determine whether it meets the core criteria specified in section 269C, which requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. The obligations imposed by the Act include the CEO's responsibility to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (subsection 269K(1)). In this case, Kathmandu Pty Ltd applied for a TCO for certain bags on 24 June 2011, and no submissions were received in response to the published notice. If the CEO is satisfied that the application meets the core criteria, they must make a written order (TCO) declaring that the goods subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (subsection 269P(3)). In this instance, the CEO determined that the bags are subject to item 50 of Schedule 4 to the Tariff, resulting in a rate of duty of free, whereas the general rate of duty on these goods is 5%. In terms of consequences for breach, the Act does not specify any criminal offences or penalties for failing to comply with the TCO provisions. However, the Act does provide that a 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 (subsection 269S(1)). The rights of importers will be beneficially affected, as they 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 (paragraph 126(1)(r) of the Regulations). It is important to note that the TCO does not impose any liabilities on any person.