EXPLANATORY STATEMENT
Tariff Concession Instrument No.0501411
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.
McCalls Pattern Service Pty Ltd applied for a TCO in respect of certain dyed taffeta polyester fabrics on 4 February 2005.
Instrument
TCO No 0501411 was made on 22 April 2005. It declares that those certain dyed taffeta polyester fabrics 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 10%. The rate of duty for the goods subject to the TCO is 3%.
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. 0501411 is taken to have come into force on 4 February 2005.
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 Tariff Concession Instrument No. 0501411 was enacted in 2005 to address the need for tariff concessions on certain goods under the Customs Act 1901. This instrument was introduced by the Chief Executive Officer of Customs, who was authorised to issue Tariff Concession Orders (TCOs) under section 269F of the Act. The primary objective of this legislation is to provide a lower rate of customs duty for specific goods, provided that no substitutable goods are produced in Australia, as outlined in section 269C of the Act. In the case of McCalls Pattern Service Pty Ltd, the application for tariff concessions on dyed taffeta polyester fabrics was approved on 22 April 2005, with the CEO finding that no substitutable goods were being produced domestically. Consequently, the general duty rate of 10% was reduced to 3% for these fabrics, benefiting importers who can apply for duty refunds for goods imported since the effective date of the TCO, 4 February 2005.
Scope and Application
The Tariff Concession Instrument No. 0501411, under the Customs Act 1901, applies to McCalls Pattern Service Pty Ltd and specifically to certain dyed taffeta polyester fabrics. The Act allows for a lower rate of customs duty to be applied to goods that are the subject of a Tariff Concession Order (TCO), as long as the application meets the core criteria stipulated in the Act. This process involves determining whether substitutable goods are produced in Australia in the ordinary course of business. If the Chief Executive Officer of Customs (CEO) is satisfied that no such substitutable goods are produced, they must make a TCO, which was the case for these fabrics, reducing the duty rate from 10% to 3%. The CEO must also publish a notice in the Gazette inviting submissions on the TCO application, though in this instance, no submissions were received. The TCO came into force on the day the application was lodged, 4 February 2005, and it does not disadvantage any person or impose liabilities for actions prior to its registration.
Key Provisions
The main operative sections of the Customs Act 1901 relevant to Tariff Concession Orders (TCO) are sections 269F, 269C, 269B, 269D, 269E, and 269P (subsection 3). Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO. If the CEO is satisfied that the application is valid and meets the core criteria, they are required under section 269C to make a written order (a TCO) stating that the goods in question are subject to a lower rate of customs duty. The core criteria under section 269C require that no substitutable goods were produced in Australia on the day the application was lodged, where ‘substitutable goods’ are defined in section 269B as goods produced in Australia that could be put to a similar use as the goods in the TCO application. The CEO must then declare under section 269P(3) that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed on parties by this legislation include the requirement for McCalls Pattern Service Pty Ltd, or any other applicant, to lodge an application for a TCO under section 269F if they wish to benefit from a lower rate of customs duty. The CEO, on receiving the application, must determine whether it meets the core criteria under section 269C and, if so, must make a written order as a TCO under section 269P(3). Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to lodge submissions if they believe the TCO should not be made, although in this case no submissions were received. The obligations also extend to ensuring the rights of importers are beneficially affected, as per paragraph 126(1)(r) of the Regulations, allowing them to apply for a refund of duty on goods imported since the TCO was taken to have come into force.
The Customs Act 1901 imposes specific civil consequences for breach of its provisions concerning TCOs. Any person who fails to comply with the conditions set out in a TCO may be subject to penalties as per the general provisions of the Customs Act, which can include financial penalties, seizure of goods, or other enforcement actions. While the explanatory statement does not detail specific penalties, it is understood that the Act provides for enforcement mechanisms to ensure compliance. Furthermore, the Act ensures that the TCO does not affect the rights of any person, other than the Commonwealth, in a way that disadvantages them or imposes liabilities in respect of anything done or omitted before the TCO was registered.