EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0609315
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.
Genevieve Yarn Dyers (Australia) Pty Ltd applied for a TCO in respect of certain multiple ply knitting yarns on 30 May 2006.
Instrument
TCO No 0609315 was made on 11 August 2006. It declares that those certain multiple ply knitting yarns 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. 0609315 is taken to have come into force on 30 May 2006 .
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. 0609315, enacted in 2006, amends the Customs Act 1901 to provide relief on customs duties for certain multiple ply knitting yarns. The Act, administered by the Parliament of Australia, addresses the gap in providing tariff concessions for specific goods that are not produced domestically and are necessary for particular uses. The policy objective is to facilitate the importation of these goods by granting free tariff treatment, thereby reducing costs for businesses and consumers. The Tariff Concession Order was made by the Chief Executive Officer of Customs after it was determined that no substitutable goods were produced in Australia, thus meeting the core criteria set out in the Act. The instrument became effective on the date the application was lodged, 30 May 2006, and does not impose any liabilities or disadvantage existing rights of persons other than the Commonwealth.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to apply reduced customs duties on certain goods. This process applies to any person who meets the core criteria set out in section 269C of the Act, which requires that no substitutable goods were produced in Australia on the day the application was lodged. The geographic reach of this legislation is national, as it operates under the purview of the Commonwealth of Australia. The Act does not apply to goods specified in section 269SJ, which outlines those ineligible for a TCO. TCO No. 0609315, for example, was issued on 11 August 2006, for certain multiple ply knitting yarns, setting the duty rate at free, which contrasts with the general rate of 5%. This order took effect on 30 May 2006, the date the application was lodged, and it does not retroactively affect the rights or impose liabilities on any person other than the Commonwealth. The TCO aims to benefit importers who can apply for duty refunds on goods imported since the effective date of the order.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0609315 under the Customs Act 1901 (section 269P(3)) require the Chief Executive Officer (CEO) of Customs to make a written order, known as a Tariff Concession Order (TCO), if satisfied that a TCO application meets the core criteria. Specifically, section 269C requires that, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269P(3) further mandates the CEO to declare the goods subject to the TCO application as being subject to a specified item of Schedule 4 to the Customs Tariff Act 1995. For the particular case of Genevieve Yarn Dyers (Australia) Pty Ltd, the TCO No. 0609315 declares that certain multiple ply knitting yarns are subject to item 50 of Schedule 4, with the general rate of duty being 5% and the concessional rate being free.
The obligations imposed by the Act on the parties it governs primarily involve the CEO of Customs. The CEO must assess whether an application for a TCO meets the core criteria as stipulated in section 269C. If the CEO determines that the application meets these criteria, they are mandated to make a TCO and publish a notice in the Gazette inviting any person to lodge submissions if they believe the TCO should not be made. In the instance of TCO No. 0609315, no submissions were received. Additionally, the Act ensures that the rights of importers will be beneficially affected, as they can apply for a refund of duty on goods imported since the date the TCO is taken to have come into force.
Under the Customs Act 1901, the consequences for non-compliance with the requirements of a TCO or the process for obtaining one are not explicitly detailed in the explanatory statement. However, breaches of any statutory obligations could potentially lead to civil or criminal penalties as prescribed by other sections of the Customs Act 1901. For instance, penalties for fraud, smuggling, and other serious breaches of customs regulations can include substantial fines and imprisonment. In this specific context, if the CEO fails to properly assess an application or improperly issues a TCO, it could result in legal challenges or administrative penalties, although the precise penalties are not outlined in the explanatory statement.
The Act also ensures that the TCO does not affect the rights of any person other than the Commonwealth adversely or impose liabilities on any person for actions taken prior to the TCO's registration. This protection is outlined to ensure that the TCO's implementation does not inadvertently disadvantage any party. Importers, however, will benefit from the TCO as they can apply for a refund of duty on goods imported since the TCO's effective date.