EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0511360
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 31 August 2005.
Instrument
TCO No 0511360 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. 0511360 is taken to have come into force on 31 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 Tariff Concession Instrument No. 0511360 was enacted as part of the Customs Act 1901 to address the problem of providing tariff concessions for certain goods that are not produced domestically in Australia. The Customs Act 1901 facilitates the process by which the Chief Executive Officer of Customs can grant Tariff Concession Orders (TCOs) to lower the rate of customs duty for specified goods. This legislative instrument was introduced to ensure that the application of tariff concessions aligns with the policy objective of encouraging the import of goods that are not produced locally, thereby enhancing market competition and consumer choice. The Tariff Concession Instrument No. 0511360, made on 20 December 2005, specifically applies to certain Bed Linen, reducing the duty rate from 17.5% to 0%, effective from 31 August 2005, the date the application was lodged. This initiative was undertaken by the CEO after considering submissions, including one from Ecodownunder Pty Ltd, and ensures that the rights of importers are advantageously affected without imposing any new liabilities.
Scope and Application
The Customs Act 1901, as amended, provides the framework for Tariff Concession Orders (TCOs) that reduce or eliminate customs duty on specific goods. These TCOs apply to entities and individuals involved in the importation of specified goods, where it is established that no substitutable goods are produced in Australia in the ordinary course of business. The Act's application is national in scope, encompassing all states and territories within Australia, and its provisions extend to all goods subject to the Australian Customs Tariff unless specifically excluded by section 269SJ of the Act. The legislation enables the Chief Executive Officer of Customs to assess applications for tariff concessions, ensuring that the goods in question do not have local alternatives, which is critical for the determination of tariff benefits. The TCOs are effective from the date of application lodgement and do not retroactively affect the rights or liabilities of any party, ensuring clarity and fairness in their implementation.
Key Provisions
The main operative sections of this legislation are sections 269C, 269P(3), 269K(1), 269M(1), and 269S(1) of the Customs Act 1901 (the Act). Section 269C outlines the core criteria that must be met for an application for a Tariff Concession Order (TCO) to be accepted, specifically that no substitutable goods were produced in Australia on the day the application was lodged. Section 269P(3) mandates that if the Chief Executive Officer (CEO) of Customs is satisfied that an application meets the core criteria, they must issue a written TCO. Section 269K(1) requires the CEO to publish a notice in the Gazette inviting objections to the TCO, while section 269M(1) allows the CEO to invite a specific person to submit a written objection. Section 269S(1) stipulates that a TCO is effective from the date the application was lodged.
The Act imposes several obligations on parties involved with TCOs. For applicants, it requires them to ensure that their application meets the core criteria, particularly that no substitutable goods were produced in Australia on the day the application was made. For the CEO, it mandates the publication of a notice in the Gazette to invite objections to the TCO, as well as the option to invite specific objections from parties who may have a reason to oppose the TCO. Additionally, the CEO must make a written TCO if the application meets the core criteria. Importers who benefit from the TCO can apply for a refund of duty on goods imported since the TCO came into force.
Under the Customs Act 1901, breaches of the provisions regarding TCOs may not explicitly state offences, penalties, or consequences. However, failure to comply with the requirements of lodging a valid TCO application or the CEO’s obligations to publish notices and consider objections could potentially lead to legal challenges regarding the validity of the TCO. If an invalid TCO is issued, it could be subject to judicial review, and the consequences could include the TCO being overturned or the applicant facing civil or administrative penalties for misrepresentation or fraud. The Act does not specify maximum penalties for breaches but leaves it to the courts to determine appropriate remedies in case of invalidity or improper application of the TCO provisions.