EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0511357
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.
Sheridan Australia applied for a TCO in respect of certain Bed Linen on 30 August 2005.
Instrument
TCO No 0511357 was made on 20 December 2005. It declares that those certain Bed Linen 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 17.5%. 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. One submission objecting to the TCO application was received from Ecodownunder Pty Ltd.
Further, subsection 269M(1) of the Act provides that if the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO. The CEO invited Ecodownunder to lodge a written submission.
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. 0511357 is taken to have come into force on 30 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 Commonwealth Parliament, includes provisions for Tariff Concession Orders (TCOs) under Part XVA. These orders enable the Chief Executive Officer of Customs to apply a lower rate of customs duty on specified goods, provided certain criteria are met. This mechanism was introduced to address the need for flexibility in customs duties to support economic and trade policies, particularly by reducing costs for businesses importing specific goods. The process involves an application from interested parties, assessment by the CEO, and opportunities for objections before a decision is made. The policy objective is to ensure that such tariff concessions are granted only when no substitutable goods are produced domestically, thereby protecting local industries while also offering relief to businesses reliant on imported goods.
The Tariff Concession Instrument No. 0511357, made under the Customs Act 1901, was introduced following an application by Sheridan Australia for tariff concessions on certain bed linen on 30 August 2005. The instrument, which came into force on the same date, declared that the specified bed linen would be subject to a zero rate of duty instead of the general 17.5% duty. This decision was made after the CEO was satisfied that no substitutable goods were being produced in Australia. The instrument allows for the refund of duties paid on these goods since the date of the application, providing a benefit to importers without imposing any new liabilities on other parties. The instrument also incorporated a consultation process, inviting objections and submissions, of which one was received from Ecodownunder Pty Ltd.
Scope and Application
The Customs Act 1901 applies to the process of applying for and making Tariff Concession Orders (TCOs), which provide for lower rates of customs duty on specified goods. This process is overseen by the Chief Executive Officer of Customs (CEO) who must assess applications to ensure they meet the core criteria set out in the Act. These criteria require that no substitutable goods, meaning goods produced in Australia that could serve the same purpose as the goods in question, are produced in Australia in the ordinary course of business on the day the application was lodged. If the CEO determines that the application meets these criteria, they must make a written TCO. The scope of the Act extends nationally, with the CEO’s decisions and the application of TCOs affecting importers of the specified goods. Exclusions apply to certain goods that cannot be the subject of a TCO, as outlined in section 269SJ of the Act. The Act also includes provisions for public consultation and notification, requiring the CEO to publish notices in the Gazette and inviting submissions from interested parties. The commencement of a TCO is effective from the date the application is lodged, although the rights of persons other than the Commonwealth are protected from disadvantage or new liabilities arising from actions taken before the TCO's registration.
Key Provisions
The main operative sections of this legislation pertain to the creation, assessment, and publication of Tariff Concession Orders (TCOs) under the Customs Act 1901. Section 269F allows individuals or companies to apply for a TCO in respect of goods. Section 269C outlines the core criteria that an application must meet for the Chief Executive Officer (CEO) of Customs to approve it, specifically that no substitutable goods are produced in Australia at the time the application is lodged. Section 269P(3) mandates that if the CEO is satisfied that an application meets the core criteria, they must issue a TCO. The instrument in question, TCO No. 0511357, was made on 20 December 2005, declaring certain bed linen as eligible for a 0% duty rate under item 50 of Schedule 4 to the Customs Tariff Act 1995.
The Act imposes specific obligations and requirements on both applicants and the CEO. For applicants, the primary requirement is to ensure that their application is valid and meets the core criteria set out in the Act. This includes demonstrating that no substitutable goods are produced in Australia. The CEO, on the other hand, must review the application, consider any submissions from interested parties, and decide whether to issue a TCO based on the criteria outlined in section 269C. Additionally, the CEO is required to publish a notice in the Gazette inviting submissions from any person who might have a reason to oppose the TCO, as stipulated in subsection 269K(1).
Failure to comply with the provisions of the Customs Act 1901 can result in significant consequences. While the explanatory statement does not detail specific offences or penalties, it is generally understood that breaches of the Act can lead to both civil and criminal penalties. For instance, non-compliance with duty obligations or fraudulent activities could result in fines, imprisonment, or both, depending on the severity and intent of the breach. The exact penalties would be determined based on the specific provisions of the Act and any relevant case law.
In summary, the Customs Act 1901 and the associated TCO framework establish a structured process for tariff concessions, ensuring that only eligible applications are approved. The obligations are clear for both applicants and the CEO, and while specific penalties are not detailed in the explanatory statement, the potential consequences for non-compliance are significant. This regulatory approach aims to balance the interests of businesses with the need to protect domestic industries and revenue.