EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1135920
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.
The Reject Shop Ltd applied for a TCO in respect of certain party string on 27 October 2011.
Instrument
TCO No 1135920 was made on 16 January 2012. It declares that those certain party string 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. 1135920 is taken to have come into force on 27 October 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, establishes a framework for the regulation of customs and excise duties. This Act includes provisions for the making of Tariff Concession Orders (TCOs) under Part XVA, aimed at reducing the customs duty on specific goods when certain conditions are met. The Tariff Concession Instrument No. 1135920, issued on 16 January 2012, provides an example of this mechanism in action. In this instance, The Reject Shop Ltd applied for a TCO for certain party string, which was granted after the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia. This determination led to the application of a free rate of duty on the goods, down from the general rate of 5%. The policy objective here is to facilitate the import of goods that are not domestically produced, thereby supporting trade and potentially lowering consumer costs. The instrument ensures that the rights of importers are protected, and it does not impose any liabilities on any person beyond the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 1135920 under the Customs Act 1901 applies to specific goods that are subject to a Tariff Concession Order (TCO), granted to The Reject Shop Ltd for certain party strings. The Act allows for the application of lower rates of customs duty on goods specified in a TCO, provided that these goods meet the core criteria outlined in the Act, specifically that no substitutable goods are produced in Australia in the ordinary course of business. This instrument is significant for entities engaged in the importation of these goods, as it effectively reduces the customs duty from the general rate of 5% to free, benefiting importers by potentially entitling them to a refund of duty on goods imported since the effective date of the TCO. The geographic reach of this Act is national, as it pertains to customs duty applied across Australia, and it extends to any person or entity importing the specified goods. The application of the TCO does not disadvantage any person other than the Commonwealth nor does it impose any liabilities on persons other than the Commonwealth. The Act's provisions are further defined and clarified by the Customs Tariff Act 1995, with subordinate instruments potentially extending or restricting the application as necessary.
Key Provisions
The main operative sections of this legislation, specifically Tariff Concession Instrument No. 1135920, revolve around the granting of tariff concessions for certain goods under the Customs Act 1901. Section 269F allows an applicant, such as The Reject Shop Ltd in this instance, to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) for specific goods, in this case, certain party string. If the CEO determines that the application meets the core criteria (section 269C), they are mandated to issue a TCO (section 269P(3)). This order, as detailed in TCO No. 1135920, specifies that the goods in question are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of free instead of the general rate of 5%.
The obligations imposed by the Act on the parties involved are primarily centered on the CEO’s duties. Upon receiving a valid application for a TCO, the CEO must publish a notice in the Gazette, inviting any interested parties to lodge submissions if they believe the TCO should not proceed (subsection 269K(1)). In this case, no submissions were received. The CEO must also ensure that the application complies with the criteria set out in section 269C, confirming that no substitutable goods are produced in Australia at the time of application. Additionally, the Act stipulates that a TCO takes effect from the date the application is lodged (subsection 269S(1)), which in this scenario was 27 October 2011.
In terms of consequences for non-compliance, the Customs Act 1901 does not explicitly outline specific offences or penalties related to the issuance or misuse of TCOs. However, any breach of the conditions set forth in the TCO or the general provisions of the Act could potentially lead to legal action under the broader regulatory framework. While the explanatory statement does not detail maximum penalties, general provisions under the Customs Act may impose fines and other penalties for non-compliance with customs regulations. Furthermore, the Act ensures that the rights of importers are positively affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date, as per paragraph 126(1)(r) of the Regulations.