EXPLANATORY STATEMENT
Tariff Concession Instrument No.0501866
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.
AUNDE Australia Pty Ltd applied for a TCO in respect of certain continuous filament man-made fibre yarn on 11 February 2005.
Instrument
TCO No 0501866 was made on 22 April 2005. It declares that those certain continuous filament man-made fibre yarns 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 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. 0501866 is taken to have come into force on 11 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 Customs Act 1901 was enacted by the Australian Parliament to establish a comprehensive framework for the administration of customs duties and related matters. The Act provides the legal basis for the Australian Customs Service, including the power to make Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs. These orders allow for reduced customs duties on specified goods under certain conditions, thus facilitating trade by lowering the cost of imported goods. The Tariff Concession Instrument No. 0501866 was introduced to address the need for tariff concessions on specific goods, ensuring that they are not subject to higher customs duties when there are no substitutable goods produced in Australia. The policy objective of the Act, as outlined, is to manage the import of goods effectively while promoting fair trade practices and providing economic benefits to importers by reducing the duty rates on eligible goods.
Scope and Application
The Customs Act 1901, under Part XVA, facilitates the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to apply lower rates of customs duty on specified goods. This mechanism is available to any person who applies to the CEO for a TCO, provided the goods in question are not those listed in section 269SJ, which are ineligible for such concessions. An application will meet the core criteria if, on the date of lodging, no substitutable goods were produced in Australia in the ordinary course of business, with definitions for key terms such as 'goods produced in Australia', 'ordinary course of business', and'substitutable goods' provided in the Act. Once an application meets these criteria, the CEO is required to issue a TCO, which applies to the specified goods as per the prescribed item in Schedule 4 to the Customs Tariff Act 1995. The TCO also mandates consultation, where the CEO must publish a notice in the Gazette inviting submissions from interested parties, although in this instance, no submissions were received. The TCO's effective date aligns with the date the application was lodged, ensuring no retroactive disadvantage to third parties. This legislative framework thus enables targeted tariff reductions, benefiting importers by potentially allowing them to claim duty refunds for goods imported since the TCO's effective date, without imposing any new liabilities on non-Commonwealth entities.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0501866 under the Customs Act 1901 include sections 269C, 269B, and 269P(3) (paragraphs 1-3). These sections establish the criteria for the Chief Executive Officer of Customs (CEO) to consider when deciding whether to grant a Tariff Concession Order (TCO). Specifically, section 269C mandates that the CEO must ensure that no substitutable goods were produced in Australia in the ordinary course of business on the date the application was lodged. Definitions for terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269B respectively. If the CEO is satisfied that the application meets these core criteria, they must issue a written TCO, as stipulated in section 269P(3). In this case, AUNDE Australia Pty Ltd applied for a TCO in respect of certain continuous filament man-made fibre yarn on 11 February 2005, and the CEO issued TCO No. 0501866 on 22 April 2005, declaring that these yarns are subject to a reduced customs duty rate of 3% instead of the general rate of 5%.
The obligations imposed on the parties governed by this Act are primarily on the CEO of Customs, who must ensure that the application for a TCO meets the core criteria outlined in the Act. This involves verifying that no substitutable goods were produced in Australia on the date the application was lodged, as per section 269C. The CEO is also required to publish a notice in the Gazette, inviting submissions from any person who might have reasons why the TCO should not be made, as per subsection 269K(1) (paragraph 5). Furthermore, the Act stipulates that the TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration, ensuring that no individual or entity is disadvantaged or imposed with liabilities concerning actions taken before the registration date, as outlined in the Explanatory Statement (paragraph 9).
The Act also delineates the consequences and penalties for non-compliance with the provisions. Although specific offences and penalties are not detailed in the provided text, it is clear that the Act seeks to protect the rights of individuals and entities by ensuring that the TCO does not impose any liabilities on any person (other than the Commonwealth). The Act’s focus on protecting pre-existing rights and avoiding the imposition of new liabilities suggests a framework designed to maintain fairness and legal certainty in the application and implementation of tariff concessions (paragraph 10).