EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0511033
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.
Standard Knitting Mills Pty Ltd applied for a TCO in respect of certain Yarn on 19 August 2005.
Instrument
TCO No 0511033 was made on 28 October 2005. It declares that those certain Yarn 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 0%.
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. 0511033 is taken to have come into force on 19 August 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, enacted by the Australian Parliament, provides a framework for the regulation of goods entering and leaving Australia, including the imposition of customs duties. One of the mechanisms within this Act is the Tariff Concession Order (TCO), which allows for the reduction or elimination of customs duty on certain goods under specific conditions. The primary gap this mechanism addresses is the potential economic disadvantage faced by businesses that rely on importing goods that are not produced domestically or for which there are no suitable domestic substitutes. The objective of the TCO scheme is to facilitate the importation of goods that are not produced in Australia in the ordinary course of business, thereby supporting industries and consumers by reducing the cost of these goods.
The Tariff Concession Instrument No. 0511033, issued on 28 October 2005, exemplifies the application of this scheme. In this case, Standard Knitting Mills Pty Ltd successfully applied for a TCO for certain yarn, which resulted in a reduction of the customs duty rate from 5% to 0%. The decision to grant this concession was based on the determination that no substitutable goods were produced in Australia at the time of the application. The instrument was effective from 19 August 2005, the date the application was lodged, and it did not impose any liabilities on any person, ensuring that the rights of importers were beneficially affected, including their ability to apply for a refund of duty on goods imported since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically through Part XVA, governs the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This Act applies to individuals or entities seeking lower rates of customs duty on goods not produced in Australia and not listed in section 269SJ, which includes goods such as those that are subject to prohibitive import controls or those that are environmentally harmful. The application of the Act is not restricted geographically but operates within the Commonwealth jurisdiction. Exclusions under this Act include the aforementioned goods specified in section 269SJ. The application of the Act can be extended or restricted through subordinate instruments, which allow the CEO to specify the detailed criteria for determining substitutable goods and ordinary course of business. This is evident in the case of TCO No. 0511033, where the CEO made a decision based on the criteria set out in sections 269C, 269D, and 269E of the Act.
Key Provisions
The primary sections relevant to the Tariff Concession Instrument No. 0511033 are sections 269C, 269F, 269K, and 269S of the Customs Act 1901. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO). If the CEO is satisfied that the application is valid and meets the core criteria as outlined in section 269C, the CEO must make a written order declaring that the goods specified in the application are subject to the concession. The CEO must also, under section 269K, publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made. Section 269S details the commencement of the TCO, which is effective from the date the application was lodged.
The Act imposes certain obligations on both the applicant and the CEO. The applicant must ensure that their application for a TCO is valid and meets the criteria stipulated by the Act, particularly ensuring that the goods in question are not specified in section 269SJ of the Act, which excludes certain goods from eligibility. The CEO, on receiving a valid application, must evaluate whether the application meets the core criteria and make a written order if satisfied. Furthermore, the CEO is required to publish a notice in the Gazette inviting any interested parties to submit their views on the application, as per section 269K.
Failure to comply with the requirements of the Customs Act 1901 can lead to various consequences. While the explanatory statement does not detail specific penalties, the general provisions of the Act may apply, potentially leading to civil or criminal penalties. Civil penalties can include fines, while criminal penalties can include imprisonment, depending on the nature and severity of the breach. The exact penalties would be determined by the court based on the specific circumstances of the case.
The Tariff Concession Instrument No. 0511033 specifies that the TCO was made on 28 October 2005 and came into effect on 19 August 2005. It is designed to provide a concession on the duty rate for certain Yarn, reducing the rate from 5% to 0%. This concession does not affect the rights of any person as at the date of registration and does not impose any liabilities on any person. Importers of these goods will have the right to apply for a refund of duty on goods imported since the TCO came into force, under paragraph 126(1)(r) of the Regulations.