EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0513489
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.
DPK Australia Pty Ltd applied for a TCO in respect of certain Combed Cotton Yarn on 30 September 2005.
Instrument
TCO No 0513489 was made on 23 December 2005. It declares that those certain Combed Cotton 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. 0513489 is taken to have come into force on 30 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 Customs Act 1901 was enacted to facilitate the regulation and administration of customs duties, providing a framework for the collection of these duties and the enforcement of customs-related laws. The introduction of Tariff Concession Orders (TCOs) under Part XVA of the Act addresses the need to provide relief from customs duties on certain goods that are not produced domestically, thereby encouraging the importation of these goods and potentially benefiting consumers by lowering prices. The policy objective is to ensure that imported goods that are not produced in Australia benefit from reduced customs duties, subject to certain criteria being met. The Tariff Concession Instrument No. 0513489 was made by the Chief Executive Officer of Customs in response to an application from DPK Australia Pty Ltd for tariff concessions on certain Combed Cotton Yarn, with the instrument declaring these goods to be subject to a zero rate of duty under item 50 of Schedule 4 to the Customs Tariff Act 1995, effective from 30 September 2005.
Scope and Application
The Customs Act 1901 applies to individuals and entities seeking tariff concessions on imported goods, with the specific provision under Part XVA allowing for the establishment of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This Act is applicable on a national level across Australia and extends to any goods that meet the criteria set forth in sections 269C and 269D, which include the production of goods in Australia and the absence of substitutable goods produced domestically. The TCOs are designed to reduce the customs duty on specified goods, provided that the application for the concession meets the core criteria outlined in the Act, such as the non-production of substitutable goods in Australia. The application process involves the CEO publishing a notice in the Gazette to invite submissions from interested parties, although in the case of TCO No. 0513489, no submissions were received. The TCO takes effect from the date the application was lodged, and it does not retroactively affect the rights of any person or impose liabilities for actions taken prior to its registration.
Key Provisions
The Tariff Concession Instrument No. 0513489 pertains to the Customs Act 1901 and specifically involves a Tariff Concession Order (TCO) for certain Combed Cotton Yarn. Section 269F allows for applications to be made to the Chief Executive Officer (CEO) of Customs for a TCO concerning goods. If the application is not for goods specified in section 269SJ, which are ineligible for a TCO, the CEO must evaluate the application against the core criteria outlined in section 269C. This section stipulates that the application must demonstrate that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged.
The Act imposes several obligations on the parties involved. For instance, section 269K(1) mandates the CEO to publish a notice in the Gazette inviting submissions from any interested parties who believe a TCO should not be made. In this case, no submissions were received. The CEO’s decision to grant the TCO, as stated in section 269P(3), requires the CEO to issue a written order specifying that the goods subject to the application are to be treated under a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The TCO provides a 0% duty rate for the specified goods, which contrasts with the general 5% rate.
Non-compliance with the Act's provisions could result in various consequences. Firstly, if an entity fails to meet the core criteria set out in section 269C, their TCO application may be denied. Additionally, under subsection 269S(1), the TCO’s effective date is the day the application was lodged, and the rights of any person other than the Commonwealth are not adversely affected by the TCO. However, if any party engages in activities that contravene the terms of the TCO, they may face civil or criminal penalties as stipulated by the Act. For instance, penalties for customs-related offences can include fines of up to $22,200 per offence for individuals and $111,000 for corporations, depending on the severity and intent behind the breach.