EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1123728
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.
Sky Fit Australia applied for a TCO in respect of certain exercise domes on 18 July 2011.
Instrument
TCO No 1123728 was made on 05 October 2011. It declares that those certain exercise domes 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. 1123728 is taken to have come into force on 18 July 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 enacted to establish a framework for the regulation of imports and exports, including the collection of customs duties and the administration of tariff concessions. The Act was introduced to address the need for a streamlined process to provide tariff concessions, thus encouraging trade and investment by reducing duties on specific goods. The Tariff Concession Instrument No. 1123728 was enacted by the Parliament of Australia, aiming to provide a concession on the customs duty for certain exercise domes as applied for by Sky Fit Australia. The policy objective was to ensure that no substitutable goods were produced in Australia in the ordinary course of business, thereby allowing the concession to be granted if it met the core criteria outlined in the Act. The instrument was effective from the date the application was lodged, providing a benefit to importers by potentially allowing them to apply for a refund of duty on goods imported since that date.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the application of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislative framework allows for the application of a lower rate of customs duty on goods specified in a TCO. The Act applies to individuals or entities that seek tariff concessions for specific goods, ensuring that such applications meet the core criteria, particularly the non-existence of substitutable goods produced in Australia at the time of application. The application process is transparent, involving a published notice in the Gazette, inviting objections, which in the case of TCO No. 1123728, did not receive any. The TCO mechanism operates under national jurisdiction and impacts importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO's effective date, without imposing liabilities on any person. The scope of the Act is extended through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the prescribed duty rates.
Key Provisions
The main operative sections of the Customs Act 1901, particularly in the context of Tariff Concession Orders (TCOs), include sections 269C, 269F, 269S, 269P, and 269K. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. Section 269C sets out the core criteria that the CEO must consider to determine if the application meets the requirements for a TCO. If the CEO is satisfied that the application meets these criteria, they must make a written order (section 269P(3)) declaring that the goods are subject to a prescribed item of the Tariff. Section 269S outlines the goods that cannot be subject to a TCO. Lastly, section 269K requires the CEO to publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made.
The obligations imposed on parties or entities by this Act primarily rest on the CEO, who is tasked with assessing applications for TCOs, ensuring they meet the core criteria, and making the appropriate written orders. The CEO must also publish notices in the Gazette inviting submissions from the public regarding the TCO applications. The applicant, in this case, Sky Fit Australia, must ensure their application for a TCO is complete and meets the core criteria specified in the Act. Additionally, the applicant must be aware of the commencement date of the TCO, which is the date the application was lodged.
In terms of consequences for breach, the Act does not explicitly state penalties for failing to comply with the requirements of a TCO. However, non-compliance with the terms and conditions of the TCO or any related customs regulations could result in civil or criminal penalties under other sections of the Customs Act 1901 or related legislation. These penalties may include fines, imprisonment, or other sanctions as determined by the courts.
For instance, under the Customs Act 1901, offences such as making a false statement or representation in a customs document can attract a penalty of up to five times the duty and penalties that would have been payable if the correct information had been provided. For criminal offences, the maximum penalties can vary significantly depending on the nature and seriousness of the offence. Civil penalties can also be imposed for breaches of customs regulations, and these can include financial penalties as well as other remedies such as injunctions or confiscation orders. The exact penalties depend on the specific breach and the relevant provisions of the Act and any subsidiary legislation.