EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1130844
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.
ASICS Oceania Pty Ltd applied for a TCO in respect of certain cricket shoes on 09 September 2011.
Instrument
TCO No 1130844 was made on 05 December 2011. It declares that those certain cricket shoes 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. 1130844 is taken to have come into force on 09 September 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 Commonwealth Parliament, addresses the need for a flexible tariff structure to accommodate the economic and trade interests of Australia. Specifically, Part XVA of the Act establishes a scheme through which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. These orders allow for a reduced rate of customs duty on specified goods, provided that the application meets the core criteria outlined in the Act, such as the absence of substitutable goods produced in Australia. ASICS Oceania Pty Ltd’s application for a TCO concerning certain cricket shoes exemplifies the Act's objective to facilitate trade by reducing tariff burdens on specific imported goods, in this case resulting in a duty-free status for the specified cricket shoes. The process includes public consultation, as mandated by the Act, though in this instance, no submissions were received. The TCO aims to benefit importers by potentially allowing them to claim refunds on duties paid prior to the order's effective date, without imposing any new liabilities on individuals.
Scope and Application
The Customs Act 1901, through its Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders apply to specific goods for which an applicant can seek a concession on the rate of customs duty. The application process requires the applicant to demonstrate that the goods in question are not prohibited under section 269SJ and that no substitutable goods are produced in Australia at the time of the application. If the CEO determines that the application meets the criteria, a TCO is issued, effectively reducing the customs duty rate on the specified goods. ASICS Oceania Pty Ltd successfully applied for a TCO on certain cricket shoes, resulting in these goods being subject to a duty rate of free, down from the general rate of 5%. The TCO mechanism ensures that the rights of existing parties are not adversely affected, and it allows importers to apply for a refund of duties paid on the affected goods since the TCO's effective date. The geographic scope of the Act applies nationally, and the CEO's decision to make a TCO can be influenced by subordinate instruments, although in this instance, no submissions were received following the publication of the application.
Key Provisions
The key operative sections of Tariff Concession Instrument No. 1130844 under the Customs Act 1901 (the Act) focus on the establishment and application of Tariff Concession Orders (TCOs). Section 269F allows a person to apply to the Chief Executive Officer of Customs (the CEO) for a TCO for certain goods. Once the CEO determines that the application does not concern goods specified in section 269SJ, which are ineligible for a TCO, they must assess whether the application meets the core criteria outlined in section 269C. The CEO must issue a written TCO if they are satisfied that no substitutable goods were produced in Australia on the day the application was lodged, as defined by section 269D (goods produced in Australia), section 269E (ordinary course of business) and section 269P(3) (substitutable goods). Once a TCO is made, the goods specified in the TCO will be subject to the duty rate specified in Schedule 4 of the Customs Tariff Act 1995.
The obligations and requirements imposed by the Act on parties or entities governed by it include the necessity for the CEO to thoroughly review applications for TCOs and ensure they meet the core criteria before issuing any orders. The CEO must also publish a notice in the Gazette, inviting submissions from interested parties regarding the TCO application. ASICS Oceania Pty Ltd, the applicant in this case, must ensure that their application is complete and accurate, providing all necessary information for the CEO to make an informed decision. Furthermore, the CEO has the duty to make the TCO effective from the day the application was lodged, as per subsection 269S(1).
The legislation also delineates the potential consequences for non-compliance with the provisions of the Act and the TCO. While the explanatory statement does not specify particular offences or penalties for breaching the TCO, the Act generally provides for both civil and criminal penalties for non-compliance. These penalties can include fines, imprisonment, or other sanctions, depending on the severity of the breach. The maximum penalties for breaches under the Customs Act 1901 can be severe, reflecting the importance of adhering to the regulatory framework. Any failure to comply with the terms of the TCO or the Act could result in significant legal and financial repercussions for the parties involved.