EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139631
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.
Kathmandu Pty Ltd applied for a TCO in respect of certain bags on 29 November 2011.
Instrument
TCO No 1139631 was made on 15 February 2012. 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. 1139631 is taken to have come into force on 29 November 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 customs and border control, among other purposes. In addressing a specific gap in the tariff concessions available under the Act, the Tariff Concession Instrument No. 1139631 was introduced in 2012 by the Chief Executive Officer of Customs. This instrument aims to provide a tariff concession for certain goods by granting a lower rate of customs duty, thereby promoting trade efficiency and supporting Australian businesses by reducing the cost of importing specified goods. The instrument was made following Kathmandu Pty Ltd's application for a tariff concession concerning certain bags, which was accepted on the basis that no substitutable goods were produced in Australia at the time of application. The instrument ensures that the rights of importers are positively affected, allowing them to apply for a refund of duty on the goods imported since the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 1139631, made under Part XVA of the Customs Act 1901, applies to goods for which Kathmandu Pty Ltd applied for a Tariff Concession Order (TCO). This Act governs the application process for TCOs, whereby the Chief Executive Officer of Customs (CEO) may grant a lower rate of customs duty on specified goods if certain criteria are met. The TCO applies to the particular bags for which Kathmandu Pty Ltd submitted an application, and these goods now attract a duty rate of free, as opposed to the general rate of 5%. The legislation is intended to benefit importers by potentially allowing them to claim a refund of duty on goods imported since the TCO came into force on 29 November 2011, as stipulated in the Customs Tariff Act 1995. Notably, the TCO does not impose any liabilities on any person and does not disadvantage any individual or entity in respect of actions taken before the TCO's effective date. The application and implementation of TCOs can be further detailed through subordinate instruments as necessary.
Key Provisions
The key provisions of Tariff Concession Instrument No. 1139631, made under the Customs Act 1901, pertain to the granting of a Tariff Concession Order (TCO) for certain bags. This instrument was made on 15 February 2012, following an application by Kathmandu Pty Ltd on 29 November 2011. The TCO declares that the specified bags are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, thereby granting them a free rate of duty instead of the general rate of 5% (section 269P(3)). This concession applies to the bags from the date of the application, 29 November 2011, as per the commencement provisions in subsection 269S(1) of the Act.
In terms of obligations, the Customs Act 1901 requires the Chief Executive Officer of Customs (CEO) to consider applications for TCOs and determine whether they meet the core criteria outlined in sections 269B, 269C, 269D, and 269E. For the TCO in question, the CEO was required to ensure that no substitutable goods were produced in Australia on the date of the application. The CEO must also publish a notice in the Gazette inviting any submissions from interested parties if the application is deemed valid (subsection 269K(1)). In this case, no submissions were received.
Failure to comply with the requirements of the Customs Act 1901 or the provisions of a TCO can lead to various consequences. The Act does not explicitly state offences or penalties for non-compliance with TCOs, but breaches of customs regulations generally can result in civil and criminal penalties. Civil penalties may include fines up to $22,200 per offence under section 160 of the Act, while criminal penalties can include imprisonment for up to five years under section 161. Additionally, there may be other legal consequences such as the confiscation of goods or further financial penalties.