EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0514157
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 0514157 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. 0514157 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 enacted to provide a framework for the administration of customs duties and related matters. This Act was introduced to address the need for a structured approach to customs duties, including the ability to grant tariff concessions for specific goods to foster trade and economic growth. The Tariff Concession Instrument No. 0514157 was made by the Chief Executive Officer of Customs under section 269F of the Act, following an application from DPK Australia Pty Ltd on 13 October 2005. The purpose of this instrument is to declare that certain yarn qualifies for a tariff concession, resulting in a zero percent duty rate instead of the general 5 percent, on the basis that no substitutable goods are produced in Australia. The instrument came into force on the date the application was lodged, and no submissions were received in opposition to the concession. The instrument does not affect any pre-existing rights or impose new liabilities on any person.
Scope and Application
The Tariff Concession Instrument No. 0514157, made under the Customs Act 1901, applies to specific goods, in this case certain yarn, for which DPK Australia Pty Ltd sought tariff concessions. The Act allows the Chief Executive Officer of Customs to grant a Tariff Concession Order (TCO) that provides for a reduced rate of customs duty on goods not produced in Australia, thereby benefiting importers of these goods. The application of the TCO is contingent on meeting the core criteria outlined in section 269C of the Act, which requires the absence of substitutable goods produced in Australia. The instrument specifies that the yarn in question is subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty rate of 0% instead of the general rate of 5%. This TCO extends its application to any importers of the specified yarn from the date the application was lodged, which is 13 October 2005, and does not impose any liabilities or disadvantage any person other than the Commonwealth. The rights of importers are beneficially affected as they can apply for a refund of duty on goods imported since the TCO's effective date.
Key Provisions
The main operative sections of this legislation (F2006L00109) are found within Part XVA of the Customs Act 1901. Section 269F outlines the application process for a Tariff Concession Order (TCO), while Section 269C specifies the core criteria that the Chief Executive Officer of Customs (CEO) must consider when assessing the application. If the CEO determines that the application meets these criteria, they are required under Section 269P(3) to issue a TCO. This order declares that the goods in question are subject to a lower rate of customs duty as specified in Schedule 4 of the Customs Tariff Act 1995. In this specific case, TCO No. 0514157 declares that certain Yarn are subject to a 0% duty rate, down from the general rate of 5%.
Entities or individuals seeking a tariff concession must comply with the application process stipulated under Section 269F. This involves submitting an application to the CEO for a TCO in respect of goods, ensuring that the goods are not specified in Section 269SJ of the Act as ineligible for such concessions. The CEO must then determine whether the application meets the core criteria outlined in Section 269C, which includes the absence of substitutable goods produced in Australia in the ordinary course of business. Additionally, Section 269K(1) mandates that the CEO publish a notice in the Gazette inviting submissions from any interested parties, although in this instance, no submissions were received.
The legislation imposes specific obligations on the CEO, including the requirement to make a written order if the application meets the core criteria, as stated in Section 269P(3). The CEO must also publish a notice in the Gazette as soon as practicable after accepting a valid application, as per Section 269K(1). Failure to adhere to these obligations could result in legal challenges regarding the validity of the TCO.
In terms of penalties, the legislation does not explicitly state penalties for non-compliance with the TCO process. However, breaches of related customs laws, such as incorrect classification of goods or failure to comply with duty obligations, could result in civil or criminal penalties. Under the Customs Act, penalties for offences can include fines up to $22,000 for individuals and $110,000 for corporations, along with potential imprisonment terms. Additionally, failure to pay duty correctly could lead to financial liabilities for the importer, including interest and additional duties owed.