EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120777
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.
Kathmandu Pty Ltd applied for a TCO in respect of certain back pack covers on 24 June 2011.
Instrument
TCO No 1120777 was made on 12 September 2011. It declares that those certain back pack covers 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. 1120777 is taken to have come into force on 24 June 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, provides a framework for managing tariffs on imported goods. One of the mechanisms under this Act is the Tariff Concession Order (TCO), which allows for reduced customs duty on certain goods, provided specific criteria are met. Specifically, the Customs Act 1901, through its Part XVA, empowers the Chief Executive Officer of Customs to grant tariff concessions if the goods in question are not produced in Australia and there are no substitutable goods available domestically. This concession aims to promote the importation of goods that cannot be locally produced, thereby supporting industry and consumers. Kathmandu Pty Ltd successfully applied for a TCO for certain backpack covers, which was granted on 12 September 2011, resulting in the elimination of customs duty on these items. This initiative aligns with the policy objective of facilitating trade and reducing costs for consumers and businesses alike.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. This Act applies to any person who applies for a TCO in respect of goods, provided those goods are not specified in section 269SJ of the Act. The geographic scope of this Act is national, as it pertains to goods imported into Australia, and the application of a TCO is contingent on the CEO's determination that no substitutable goods are produced in Australia. The Act mandates the CEO to publish a notice in the Gazette inviting submissions from any interested party if a TCO application is accepted as valid, though no submissions were received in the case of TCO No. 1120777. The instrument itself, TCO No. 1120777, was registered on 12 September 2011, and it is effective as of the date the application was lodged, 24 June 2011. This concession does not retroactively disadvantage any person or impose liabilities for actions taken before the TCO's registration date, and it benefits importers by allowing them to apply for a refund of duty on goods imported since the TCO's effective date.
Key Provisions
The Customs Act 1901 (the Act) contains provisions allowing for the creation of Tariff Concession Orders (TCOs) through Part XVA. Specifically, section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO in respect of goods. If the CEO is satisfied that the application pertains to goods not listed in section 269SJ (goods that cannot be subject to a TCO), the CEO must then assess if the application meets the core criteria as outlined in section 269C. This assessment involves determining whether, on the date the application was lodged, there were no substitutable goods produced in Australia in the ordinary course of business. Definitions for terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' are provided in sections 269D, 269E, and the definition of substitutable goods respectively.
The obligations under the Act for the CEO include publishing a notice in the Gazette once a TCO application is accepted as valid, inviting any interested parties to submit reasons why the TCO should not be made, as stipulated in subsection 269K(1). The CEO must also ensure that the application meets the core criteria before making a TCO, which involves confirming that no substitutable goods were produced in Australia on the date the application was lodged. Once these criteria are met, the CEO is required to make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, as specified in the TCO.
Under this Act, any breach of the conditions set forth for the creation and enforcement of TCOs may result in various consequences. While the Act does not explicitly detail the penalties for non-compliance, breaches of customs regulations generally attract severe penalties under other sections of the Customs Act. For instance, section 241 of the Act provides for civil penalties for offences against the Act, which can include fines up to $22,200 for individuals and substantially higher amounts for corporations. Additionally, section 242 of the Act outlines criminal penalties, which may include imprisonment, further highlighting the seriousness with which breaches of customs legislation are treated.