EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0512263
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.
Urban Cargo Pty Limited applied for a TCO in respect of certain cotton shopping bags on 16 September 2005.
Instrument
TCO No 0512263 was made on 25 November 2005. It declares that those certain cotton shopping bags 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 free.
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. 0512263 is taken to have come into force on 16 September 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. 0512263 was enacted in 2005 under the Customs Act 1901, to address the need for tariff concessions on specific goods that meet certain criteria. This instrument was introduced to facilitate the application process for tariff concessions, ensuring that the Chief Executive Officer of Customs (CEO) can effectively assess and approve applications for reduced customs duty rates. The CEO is tasked with determining whether applications for tariff concession orders (TCOs) meet the core criteria, primarily that no substitutable goods are produced in Australia, which would otherwise disqualify the application. Urban Cargo Pty Limited's application for a TCO on certain cotton shopping bags was approved based on this criterion, leading to the exemption of these goods from the usual customs duty rate of 5%, making them duty-free. The instrument came into force on the date the application was lodged, thereby ensuring that importers of these goods could benefit from the reduced duty rate retroactively from that date.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs) to specific goods, allowing for reduced rates of customs duty. The Act applies to individuals and entities who are subject to customs regulations, particularly importers seeking to reduce duty on certain goods. The process involves an application to the Chief Executive Officer of Customs (CEO) who assesses whether the goods in question meet the criteria outlined in the Act, specifically if no substitutable goods are produced in Australia in the ordinary course of business. Once a TCO is granted, it applies retroactively to the date of the application, meaning that importers can benefit from the reduced duty rates for goods imported from that date forward. The geographic reach of this Act is national, as it operates under the Commonwealth’s jurisdiction, but it specifically affects trade and import activities. Exclusions include goods specified in section 269SJ of the Act, which cannot be subject to a TCO. The application and impact of a TCO can be further detailed or modified by subordinate instruments, which may provide additional criteria or administrative processes.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0512263 (the Instrument) are sections 269C, 269P, and 269S of the Customs Act 1901 (the Act). Section 269C sets out the core criteria that a Tariff Concession Order (TCO) application must meet, namely, that no substitutable goods were produced in Australia on the day the application was lodged. If the Chief Executive Officer (CEO) of Customs is satisfied that the application meets these criteria, they must make a TCO, as outlined in section 269P. Section 269S specifies that the TCO is taken to have come into force on the date the application was lodged.
The obligations and requirements imposed by the Act on the parties or entities it governs are primarily directed towards the CEO of Customs. Once an application for a TCO is deemed valid, the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not proceed. If no objections are received, the CEO must proceed to make the TCO. Additionally, the CEO must ensure that the TCO application adheres to the core criteria, specifically that no substitutable goods were produced in Australia at the time of application. For Urban Cargo Pty Limited, the obligation is to ensure their application meets these criteria and to provide any necessary documentation or information to substantiate their claim.
Breaching the requirements of the Act can lead to various consequences. For instance, if the CEO fails to adhere to the statutory obligations, such as not publishing the required notice in the Gazette or not properly assessing the core criteria of a TCO application, they may be subject to administrative review or legal action. While the Act does not explicitly state penalties for such breaches, failure to comply with statutory requirements can result in invalid TCOs, which could lead to retrospective liabilities for the applicants and potential loss of tariff benefits. The Act also ensures that the rights of non-Commonwealth persons are not adversely affected by the TCO, thereby avoiding liabilities for individuals or entities that imported the goods prior to the TCO's effective date.