EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140094
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 radio receivers on 01 December 2011.
Instrument
TCO No 1140094 was made on 13 February 2012. It declares that those certain radio receivers 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. 1140094 is taken to have come into force on 01 December 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, provides a framework for the regulation of customs and excise through the establishment of a tariff system. The Act, particularly Part XVA, addresses the need for tariff concession orders (TCOs) that can lower the customs duty on specific goods under certain conditions. This legislative instrument was introduced to facilitate a more flexible tariff system that can respond to economic and trade policy needs by allowing the Chief Executive Officer of Customs to reduce customs duty on goods where appropriate. The Tariff Concession Instrument No. 1140094, made under the authority of the Customs Act, demonstrates this process by granting tariff concessions on certain radio receivers, effectively setting the duty rate at zero, thereby benefiting importers and potentially stimulating trade in these goods. The policy objective behind such instruments is to enhance the competitiveness of Australian industries by reducing the cost of imported goods that do not have domestic alternatives.
Scope and Application
The Tariff Concession Instrument No. 1140094, under the Customs Act 1901, applies to entities such as Kathmandu Pty Ltd that seek tariff concessions on imported goods, specifically certain radio receivers in this instance. The instrument is part of a broader scheme within the Customs Act that allows the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) to reduce customs duty on specified goods. The application of this Act is national in scope, aligning with the Commonwealth’s jurisdiction over customs and excise matters. The TCO applies to goods that are not being produced in Australia and for which no substitutable goods are being produced domestically in the ordinary course of business. The Act does not impose any liabilities on individuals or entities other than the Commonwealth and does not disadvantage anyone’s rights as at the date of registration. This legislative instrument extends its application through the subordinate Customs Tariff Act 1995, specifically referencing item 50 of Schedule 4 to determine the applicable duty rates.
Key Provisions
The Tariff Concession Instrument No. 1140094 is established under section 269F of the Customs Act 1901 (the Act) and applies to radio receivers that Kathmandu Pty Ltd applied for on 1 December 2011. Pursuant to this Instrument, item 50 of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) is declared applicable to the radio receivers, thereby exempting them from the general duty rate of 5% (sections 269P(3) and 269S(1)). This concession is contingent upon the Chief Executive Officer of Customs (the CEO) being satisfied that no substitutable goods were produced in Australia on the day the application was lodged, as stipulated in section 269C of the Act.
The Act imposes certain obligations on the parties involved. According to section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any person who believes the Tariff Concession Order (TCO) should not proceed. In this instance, no submissions were received, allowing the CEO to proceed with the order. The CEO also has a duty to ensure that the TCO application meets the core criteria, which involves confirming that no substitutable goods were produced in Australia in the ordinary course of business, as per section 269C of the Act. The CEO must also ensure that the goods specified in the application are not among those listed in section 269SJ of the Act, which are ineligible for a TCO.
Failure to comply with the requirements of the Customs Act 1901 may result in civil or criminal penalties. While the Explanatory Statement does not specify the exact penalties for breaches of the Act in this context, generally, under the Act, penalties for non-compliance can include fines and, in severe cases, imprisonment. For example, section 269N of the Act provides that if a person contravenes an order made under the Act, they may be liable to a penalty. The exact penalties depend on the nature and severity of the breach, but they can be substantial. It is also important to note that any person who knowingly makes a false statement in an application for a TCO could be subject to prosecution under section 272 of the Act, which pertains to false statements made to the CEO. The penalties for making false statements can include fines and imprisonment.