EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1127416
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.
Addlon Trading applied for a TCO in respect of certain basketball backboard sets on 12 August 2011.
Instrument
TCO No 1127416 was made on 07 November 2011. It declares that those certain basketball backboard sets 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. 1127416 is taken to have come into force on 12 August 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 Tariff Concession Instrument No. 1127416, enacted under the Customs Act 1901, addresses the need for tariff concessions on specific goods that are not produced in Australia and for which there are no suitable substitutes. This instrument was introduced to facilitate the application process for tariff concessions, allowing the Chief Executive Officer of Customs to grant lower rates of customs duty on eligible goods. The policy objective of this instrument is to promote fair trade practices by ensuring that Australian importers are not disadvantaged by high customs duties on goods that are not domestically produced and for which there is no viable local alternative. The instrument was developed following an application by Addlon Trading for tariff concessions on certain basketball backboard sets, and it became effective from the date of the application on 12 August 2011. The process involved publishing a notice in the Gazette to invite any interested parties to object to the concession, although no submissions were received.
Scope and Application
The Tariff Concession Instrument No. 1127416, made under the Customs Act 1901, applies to goods specifically identified in the application by Addlon Trading for a tariff concession order (TCO). The Act facilitates the reduction of customs duty rates for certain goods through TCOs, which are issued by the Chief Executive Officer of Customs (CEO) once an application is deemed to meet the core criteria outlined in the Act. This includes ensuring that no substitutable goods are produced in Australia in the ordinary course of business at the time of the application. The geographic reach of this Act is national, as it pertains to the regulation and administration of customs duties across Australia. The TCO in question pertains to specific basketball backboard sets and was issued because no substitutable goods were being produced in Australia at the time of application, hence qualifying for a reduced customs duty rate of free, down from the general rate of 5%. The application of the TCO is effective from the date the application was lodged, and it does not affect any existing rights or impose liabilities on individuals or entities for actions taken prior to its issuance. The CEO's decision to issue the TCO was made without any objections from the public, as no submissions were received in response to the published notice in the Gazette.
Key Provisions
The main provisions of Tariff Concession Instrument No. 1127416 under the Customs Act 1901 (section 269P) declare that certain basketball backboard sets are subject to a tariff concession order (TCO). The CEO of Customs must make a written order if satisfied that no substitutable goods were produced in Australia (section 269C). The TCO declares that the goods are subject to a specific item in Schedule 4 of the Customs Tariff Act 1995, with a duty rate of 0% instead of the general rate of 5%. This concession takes effect from the date the TCO application was lodged, 12 August 2011 (section 269S). Importantly, this order does not retroactively affect the rights or liabilities of any person, except the Commonwealth, before the date of registration (section 269S(2)).
The Act imposes specific obligations on the Chief Executive Officer of Customs (CEO) when processing a TCO application. Firstly, the CEO must ensure that the application is not for goods specified in section 269SJ, which cannot be subject to a TCO. Secondly, the CEO must assess whether the application meets the core criteria as outlined in section 269C. This involves verifying that no substitutable goods were produced in Australia on the day the application was lodged. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any interested parties who may have reasons why the TCO should not be made (section 269K). In this case, no submissions were received.
Under the Customs Act 1901, breaches of the provisions governing TCOs could lead to civil or criminal penalties, depending on the nature and intent of the breach. Specifically, section 283 of the Act outlines that knowingly making a false or misleading statement in an application can result in civil penalties, such as fines up to a maximum of $22,200 for individuals and $111,000 for corporations. In more severe cases, where the offence is intentional, criminal penalties can be applied, potentially resulting in imprisonment for up to two years. However, the explanatory statement does not detail any specific breaches or penalties related to this particular TCO.
The TCO does not impose any new liabilities on persons other than the Commonwealth and does not disadvantage anyone who acted in good faith prior to the TCO's effective date. It provides a benefit to importers by allowing them to apply for a refund of duty on goods imported since the TCO's effective date under paragraph 126(1)(r) of the Regulations. This ensures that importers who have already paid the higher duty rate can seek reimbursement, thereby aligning with the intent of the concession.