EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514155
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 Yarn on 13 October 2005.
Instrument
TCO No 0514155 was made on 3 January 2006. 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. 0514155 is taken to have come into force on 13 October 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 amended to include a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs. This scheme was introduced to address the issue of applying a lower rate of customs duty to goods specified in a TCO, thereby facilitating trade by reducing the cost of imported goods. The Tariff Concession Instrument No. 0514155, enacted in 2006, outlines the process for making such concessions, with a specific focus on ensuring that no substitutable goods are produced in Australia. The policy objective of this legislation is to promote economic efficiency by allowing tariff reductions on goods where Australian production does not exist, thereby encouraging trade and potentially benefiting importers through duty refunds. The instrument was developed following an application by DPK Australia Pty Ltd for a TCO concerning certain yarn, which was granted as no substitutable goods were produced in Australia at the time of application.
Scope and Application
The Tariff Concession Instrument No. 0514155, under the Customs Act 1901, applies to any individual or entity seeking a tariff concession order for goods that are subject to customs duty. This Act allows for the reduction of customs duty on specified goods, provided certain conditions are met. Specifically, the Act applies to the Chief Executive Officer of Customs who is responsible for deciding whether an application for a tariff concession meets the core criteria, which includes ensuring that no substitutable goods are produced in Australia at the time the application is lodged. The geographical scope of the Act is national, as it operates under the Commonwealth jurisdiction, thereby affecting all entities involved in the importation of goods within Australia. Exclusions under this Act are clearly defined, notably in section 269SJ, which lists goods that cannot be subject to a tariff concession order. The Act also extends its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the prescribed rates of duty that can be altered by a tariff concession order.
Key Provisions
The Tariff Concession Instrument No. 0514155 under the Customs Act 1901 (section 269F) details the process for granting a Tariff Concession Order (TCO) that allows for a lower rate of customs duty on specific goods. Specifically, section 269C requires the Chief Executive Officer (CEO) of Customs to consider whether a TCO application meets the core criteria. These criteria are defined in section 269B and section 269D, which detail the meanings of 'goods produced in Australia', 'ordinary course of business', and 'substitutable goods'. The CEO must be satisfied that no substitutable goods are produced in Australia on the day the application is lodged (section 269P(3)).
In the case of DPK Australia Pty Ltd's application for certain yarn, the CEO was satisfied that no substitutable goods were produced in Australia, leading to the issuance of TCO No. 0514155 on 3 January 2006. This order declared that the yarn in question is subject to a 0% duty rate instead of the general 5% duty rate (item 50 of Schedule 4 to the Customs Tariff Act 1995). The TCO applies from the date the application was lodged, 13 October 2005, as per subsection 269S(1) of the Act. The TCO does not affect any rights or impose any liabilities on any person other than the Commonwealth prior to the registration date.
As part of the process, the CEO must publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)). In this instance, no submissions were received in response to the notice. The rights of importers are beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO's effective date (paragraph 126(1)(r) of the Regulations). Importantly, the TCO does not impose any liabilities on any person.
For entities involved in importing goods subject to a TCO, compliance with the Act is crucial. Importers must ensure that their goods meet the criteria for the concession and that any applications for duty refunds are made within the stipulated timeframes. Failure to comply with the terms of the TCO or the Customs Act 1901 may result in penalties. The Act does not explicitly state the penalties for non-compliance with the TCO provisions, but general penalties under the Customs Act 1901 include fines and, in some cases, imprisonment. The severity of these penalties can depend on the nature and extent of the breach.