EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1139639
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 fishing kits on 29 November 2011.
Instrument
TCO No 1139639 was made on 15 February 2012. It declares that those certain fishing kits 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. 1139639 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, enacted by the Australian Parliament, established a framework under which Tariff Concession Orders (TCOs) could be issued by the Chief Executive Officer of Customs. These orders reduce the rate of customs duty on specified goods when the Chief Executive Officer determines that no substitutable goods are produced in Australia in the ordinary course of business. This legislative instrument aims to support Australian industries by potentially reducing the cost of imported goods and promoting local production where applicable. Kathmandu Pty Ltd's application for a tariff concession on certain fishing kits, which was accepted on 29 November 2011, exemplifies the process outlined in the Act. The concession, declared in TCO No. 1139639 on 15 February 2012, applies a zero-rate duty to these kits, down from the general rate of 5%, effective from the date of the application. This instrument highlights the Act's intent to streamline the application process for tariff concessions while ensuring that the rights of all parties, particularly importers, are protected.
Scope and Application
The Customs Act 1901, through its Part XVA, provides a framework under which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs. These orders apply to specific goods and allow for a reduced rate of customs duty, provided certain criteria are met. A person can apply to the CEO for a TCO if the goods in question are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO is required to assess whether the application meets the core criteria, which include ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. Once the CEO is satisfied that the core criteria are met, a written order is made, declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, resulting in a specified rate of duty. The TCO does not affect the rights of any person other than the Commonwealth, nor does it impose any liabilities on any person. The commencement date of a TCO is the day on which the application for the TCO was lodged, and it does not disadvantage any person or impose liabilities for actions taken before the date of registration.
Key Provisions
The main operative sections of this legislation pertain to Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO concerning specific goods. The CEO must then decide if the application meets the core criteria specified in section 269C, which requires that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. If these criteria are met, the CEO is required to issue a written order, as stated in subsection 269P(3), declaring that the goods in question are subject to a prescribed item in Schedule 4 of the Customs Tariff Act 1995.
The Act imposes certain obligations on the CEO, primarily ensuring that they carefully assess each TCO application to determine if it meets the core criteria. This involves verifying that no substitutable goods were produced in Australia at the time of the application. Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette after accepting a TCO application as valid, inviting any person who believes the TCO should not be made to submit their reasons to the CEO. In this particular case, the CEO did not receive any submissions, indicating that no objections were raised against the application.
In terms of potential offences and consequences, the Act does not explicitly detail specific penalties for non-compliance with the TCO provisions. However, any failure by the CEO to correctly assess and issue TCOs according to the criteria set out in the Act could potentially lead to legal challenges or administrative reviews. Importers who take advantage of the TCO by applying for duty refunds for goods imported since the TCO's effective date can benefit, but any misuse or fraud in the application process could result in civil or criminal penalties under other relevant laws. The exact penalties would depend on the nature and severity of the breach, but they could include fines or other legal consequences.
The TCO does not affect the rights of any person other than the Commonwealth, ensuring that it does not disadvantage or impose liabilities on any third parties for actions taken before the TCO's effective date. This means that while the rights of importers are beneficially affected, the legislation ensures that existing rights and obligations are protected. The TCO’s commencement date is the day the application was lodged, ensuring that any benefits and concessions are retroactive to that date, as stated in subsection 269S(1).