EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1120778
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 cookers on 24 June 2011.
Instrument
TCO No 1120778 was made on 12 September 2011. It declares that those certain cookers 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. 1120778 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 Parliament of Australia, addresses the need for a regulatory framework governing the imposition of customs duty on imported goods. It provides a mechanism for the Chief Executive Officer of Customs to grant tariff concessions through Tariff Concession Orders (TCOs) to reduce customs duty on certain goods. The policy objective is to encourage the importation of goods that are not produced in Australia, thereby benefiting consumers and potentially stimulating economic activity. Kathmandu Pty Ltd applied for a TCO for certain cookers, and after meeting the core criteria, the CEO issued TCO No 1120778 on 12 September 2011, effective from 24 June 2011, reducing the duty rate from 5% to free. This order does not disadvantage any person by affecting their rights as of the registration date nor impose any liabilities on individuals other than the Commonwealth. Importers may apply for duty refunds on eligible goods imported since the TCO's effective date.
Scope and Application
The Tariff Concession Instrument No. 1120778 under the Customs Act 1901 applies specifically to entities or individuals who seek tariff concessions for imported goods. The Act provides a framework through which the Chief Executive Officer of Customs can make Tariff Concession Orders (TCOs) for goods, thereby applying a lower rate of customs duty. This mechanism is available to any person who applies to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act as those that cannot be subject to a TCO. The application process involves satisfying core criteria, which include the absence of substitutable goods produced in Australia at the time the application is lodged. Once a TCO is made, it applies to the goods specified in the order, effectively reducing their customs duty rate.
Geographically, the Act operates within the Commonwealth of Australia and its application is enforced nationally. The Act allows for the expansion of its scope through subordinate instruments, which may further detail the application criteria or provide additional exemptions. The TCO in question, No. 1120778, pertains to certain cookers and was effective from the date of application, 24 June 2011. Importantly, the TCO does not retroactively affect any pre-existing rights or impose liabilities on individuals or entities for actions taken before its registration, although it does confer benefits such as the potential for duty refunds to importers.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 1120778 pertain to the process and conditions under which a Tariff Concession Order (TCO) can be made. Section 269F of the Customs Act 1901 allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act. If the CEO is satisfied that the application is valid, they must determine whether it meets the core criteria, as outlined in section 269C of the Act. This involves ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO must then make a written TCO if these criteria are met, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to the goods in question.
The Act imposes certain obligations on the parties involved in the TCO process. The CEO is obligated to publish a notice in the Gazette as soon as practicable after accepting a TCO application, inviting any person who may have reasons to oppose the TCO to lodge a submission. Section 269K(1) of the Act mandates this transparency to allow for stakeholder engagement. Kathmandu Pty Ltd, the applicant in this instance, must ensure that their application meets the core criteria and provide any necessary evidence to the CEO. If the CEO decides to proceed with the TCO, they must make a written order specifying the applicable tariff concession.
Breach of the requirements set out in the Customs Act 1901 can lead to various consequences. While the explanatory statement does not specify particular offences or penalties, it is reasonable to infer that any failure to comply with the Act's provisions or fraudulent applications could result in legal actions. Penalties for such breaches could range from fines to potential criminal charges, depending on the severity and intent of the breach. The exact penalties would be determined based on the specific circumstances and relevant legislation, including the Customs Act 1901 and any subsidiary regulations.