EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1132783
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.
Kmart Australia applied for a TCO in respect of certain jump starters on 26 September 2011.
Instrument
TCO No 1132783 was made on 19 December 2011. It declares that those certain jump starters 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. 1132783 is taken to have come into force on 26 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 Australian Parliament, introduced a scheme under which Tariff Concession Orders (TCOs) can be made to provide tariff concessions on certain goods. The Tariff Concession Instrument No. 1132783, published on 19 December 2011, is a specific example of such an order. It was made in response to an application by Kmart Australia for tariff concessions on certain jump starters, which was accepted as a valid application on 26 September 2011. The Chief Executive Officer of Customs was satisfied that no substitutable goods were produced in Australia, and thus the instrument declares that the goods in question are subject to the tariff specified in item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free rather than the general rate of 5%. The policy objective of such instruments is to encourage the importation of goods that are not domestically produced, thereby benefiting importers and potentially consumers by reducing the cost of such goods.
Scope and Application
The Tariff Concession Instrument No. 1132783 under the Customs Act 1901 applies specifically to certain jump starters that Kmart Australia applied for tariff concessions on. The Act mandates that the Chief Executive Officer of Customs (CEO) must assess applications for Tariff Concession Orders (TCO) and determine if the goods in question are eligible for a lower rate of customs duty. This concession is contingent upon the CEO being satisfied that no substitutable goods are produced in Australia at the time the application is lodged. If these conditions are met, the CEO is required to issue a written order declaring that the specified goods are subject to a prescribed rate of duty as outlined in the Customs Tariff Act 1995. The application process involves publishing a notice in the Gazette to invite submissions from any interested parties, although in this instance, no submissions were received. The TCO, which came into effect on the date the application was lodged, benefits importers by potentially allowing them to apply for a refund of duty on goods imported since the commencement date, without imposing any liabilities on individuals other than the Commonwealth.
Key Provisions
The main operative sections of this legislation, namely sections 269C, 269F, 269K, and 269S of the Customs Act 1901, establish the framework for the creation and enforcement of Tariff Concession Orders (TCOs). Specifically, section 269F allows any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in relation to specific goods, subject to certain conditions (269C, 269SJ). The CEO must then determine whether the application meets the core criteria, which involves assessing whether substitutable goods are produced in Australia in the ordinary course of business (269C, 269D, 269E). If the core criteria are satisfied, the CEO must issue a written order (TCO) that specifies the application of a prescribed item from Schedule 4 of the Customs Tariff Act 1995 to the goods in question (269P(3)). The TCO then comes into effect on the date the application was lodged (269S(1)).
The Customs Act 1901 imposes several obligations on the parties involved in the TCO process. Firstly, the CEO must ensure that any TCO application is assessed against the criteria specified in section 269C. This includes verifying that no substitutable goods are being produced in Australia in the ordinary course of business. Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit their views on the proposed TCO (269K(1)). Failure to adhere to these obligations could render the TCO invalid or subject to legal challenge.
The legislation also outlines potential consequences for non-compliance with the requirements set forth in the Customs Act 1901. While the explanatory statement does not explicitly detail criminal or civil penalties for breaches, it is reasonable to infer that non-compliance with the TCO process could lead to legal repercussions. The Act does not specify maximum penalties, but breaches could potentially result in fines, imprisonment, or both, depending on the severity and intent of the violation. Additionally, any party adversely affected by an improperly granted TCO may have grounds to seek judicial review or other legal remedies.
Under this legislation, the CEO has the authority to grant TCOs that provide tariff concessions for specified goods, provided the application meets the criteria outlined in section 269C. The CEO’s role is crucial in ensuring that the application process is transparent and that all interested parties have an opportunity to voice their concerns. The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth and does not impose new liabilities on any party. This balance is essential to maintaining the integrity of the customs duty system and ensuring fair treatment for all stakeholders involved.