EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1129177
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.
Hunt Leather Pty Ltd applied for a TCO in respect of certain bags on 25 August 2011.
Instrument
TCO No 1129177 was made on 21 November 2011. It declares that those certain bags 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. 1129177 is taken to have come into force on 25 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 Customs Act 1901 was enacted to facilitate the regulation of imports and exports, ensuring that the correct tariffs are applied. The Act provides a mechanism for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to reduce the rate of customs duty on certain goods. The problem or gap it was introduced to address is the need for flexibility in tariff rates to support economic activities, such as when goods that are not produced domestically are imported. The instrument, Tariff Concession Instrument No. 1129177, was enacted by the relevant authority to address a specific application by Hunt Leather Pty Ltd for tariff concessions on certain bags. The instrument came into force on the date the application was lodged, 25 August 2011, and it ensures that the rights of importers are protected by allowing them to apply for duty refunds on goods imported since the effective date of the TCO. This legislative framework aims to support Australian industries by providing necessary concessions while maintaining the integrity of the customs tariff system.
Scope and Application
The Customs Act 1901, as amended, provides for the creation of Tariff Concession Orders (TCOs) under Part XVA, which apply to goods specified in the application and approved by the Chief Executive Officer of Customs. This process allows for a reduction in customs duty on certain goods, provided they meet the core criteria set out in the Act, such as the absence of substitutable goods produced in Australia. The application of a TCO is governed by specific legislative provisions, including sections 269C, 269B, and 269D, which define the terms 'core criteria', 'goods produced in Australia', and 'ordinary course of business'. The Act extends to the Commonwealth of Australia and applies to any individual or entity seeking a tariff concession for specified goods. Notably, the Act excludes certain goods from eligibility for a TCO, as outlined in section 269SJ. The scope of the Act can be further refined through subordinate instruments, although the primary legislation itself sets the foundational criteria and process for TCO applications. The Act ensures that the rights of persons other than the Commonwealth are protected and that no new liabilities are imposed upon them as a result of the concession.
Key Provisions
The Customs Act 1901 (the Act) allows for the establishment of Tariff Concession Orders (TCOs) under Part XVA. Section 269F of the Act enables a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO for certain goods. The CEO must consider whether the application meets the core criteria set out in section 269C of the Act, which includes ensuring that no substitutable goods were produced in Australia at the time the application was lodged. If the CEO determines that the application meets these criteria, they must issue a written order (a TCO) specifying that the goods in question are subject to a lower rate of customs duty as outlined in Schedule 4 to the Customs Tariff Act 1995 (the Tariff). For example, TCO No 1129177, made on 21 November 2011, applied to certain bags and reduced the duty rate from 5% to free.
The Act imposes several obligations on the CEO and applicants. The CEO is required to publish a notice in the Gazette inviting submissions from any interested parties if they accept a TCO application as valid, as outlined in subsection 269K(1) of the Act. The CEO must also ensure that the application does not relate to goods specified in section 269SJ of the Act, which cannot be subject to a TCO. Hunt Leather Pty Ltd’s application for a TCO for certain bags was accepted, and no submissions were received opposing the order. The TCO does not affect the rights of any person as at the date of registration, and it does not impose any liabilities on any person. Instead, it benefits importers by potentially allowing them to apply for a refund of duty on goods imported since the TCO came into force.
The Act does not specify any offences or penalties for breaches related to TCOs. However, it is important to note that any failure to comply with the requirements of the Act or the Tariff may result in other legal consequences. For example, if a person imports goods and subsequently fails to comply with the conditions of a TCO, they may face legal action for incorrect duty payments or other related breaches. The maximum penalties for such breaches would depend on the specific circumstances and applicable laws at the time of the alleged breach.