EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1140096
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 shelters on 01 December 2011.
Instrument
TCO No 1140096 was made on 13 February 2012. It declares that those certain 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. 1140096 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 was enacted by the Parliament of Australia and provides a framework for the regulation of customs duties, including the ability for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) under Part XVA of the Act. These orders allow for a lower rate of customs duty on specified goods, provided certain criteria are met. The objective of the TCOs is to facilitate trade by reducing the cost of imported goods, provided that no substitutable goods are produced in Australia. Kathmandu Pty Ltd applied for a TCO for certain shelters on 1 December 2011, and following the CEO's satisfaction that the application met the core criteria, Tariff Concession Order No. 1140096 was issued on 13 February 2012, declaring that the specified goods are subject to a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO is effective as of the date of the application, with no adverse effects on existing rights or imposition of new liabilities.
Scope and Application
The Tariff Concession Instrument No. 1140096 applies to goods that are the subject of a Tariff Concession Order (TCO) under Part XVA of the Customs Act 1901. This Act allows for the application of a lower rate of customs duty on goods if certain criteria are met, and it is the Chief Executive Officer of Customs (CEO) who has the authority to make these orders. The Act applies to entities or individuals seeking to import goods that can benefit from a tariff concession, provided that these goods are not specified in section 269SJ of the Act as those that cannot be subject to a TCO. The instrument is in force as of the date the application for the TCO was lodged, in this case, 1 December 2011, and it grants relief to Kathmandu Pty Ltd on certain shelters by applying a free rate of duty instead of the general 5% rate. The geographic reach of this Act is national, as it applies across Australia, and it does not disadvantage any person other than the Commonwealth by imposing liabilities for actions taken before the registration date. The Act’s application may be extended or restricted through subordinate instruments, ensuring flexibility in its implementation.
Key Provisions
The primary operative sections of this legislation (sections 269C, 269F, and 269P) establish the framework for Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a TCO in respect of certain goods. If the application meets the core criteria as set out in section 269C, the CEO must make a written order (the TCO) declaring that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, which effectively applies a lower rate of customs duty to those goods. The core criteria are met if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Once the CEO is satisfied that the application meets these criteria, they must make a TCO, as stipulated in section 269P.
The Act imposes several obligations on the parties it governs. Kathmandu Pty Ltd, in this instance, must ensure their application for a TCO is valid and meets the core criteria. The CEO, upon receiving an application, must assess whether it meets these criteria and determine if there are any substitutable goods produced in Australia that could affect the application. If the CEO is satisfied that the application meets the core criteria, they must publish a notice in the Gazette, inviting any interested party to submit reasons why the TCO should not be made, as per section 269K. The CEO must also ensure that the TCO does not affect the rights of a person as at the date of registration, so as not to disadvantage that person or impose liabilities on them in respect of anything done or omitted before the registration date, as per section 269S.
The legislation also outlines potential consequences for non-compliance. While the explanatory statement does not explicitly state the penalties for breaching the provisions of the Customs Act 1901 in this context, it is understood that breaches of the Act can result in both civil and criminal penalties. Civil penalties can include fines, and in more serious cases, criminal penalties can include imprisonment. The exact penalties depend on the nature and severity of the breach, as well as any relevant case law or statutory provisions. However, the explanatory statement confirms that the TCO does not impose any liabilities on any person, which suggests that the primary focus is on ensuring the correct application of tariff concessions rather than imposing punitive measures for breaches.