EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0612794
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.
Five Star Textiles Pty Ltd applied for a TCO in respect of certain cotton drawsheets on 01 August 2006.
Instrument
TCO No 0612794 was made on 27 October 2006. It declares that those certain cotton drawsheets 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 17.5%. 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. 0612794 is taken to have come into force on 01 August 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 Customs Act 1901 was enacted to regulate the importation and exportation of goods, including the imposition of customs duty. The Act provides for Tariff Concession Orders (TCOs), which can be made by the Chief Executive Officer of Customs to allow for a lower rate of customs duty on certain goods. This was introduced to address the need for tariff concessions for goods that are not substitutable by goods produced in Australia. The Tariff Concession Instrument No. 0612794, made in 2006, applies this scheme to certain cotton drawsheets, reducing their duty rate from 17.5% to free, as no substitutable goods were produced in Australia at the time of the application. The instrument was published in the Gazette with an invitation for submissions, none of which were received, and it came into force on the date the application was lodged, benefiting the rights of importers who may apply for a refund of duty.
Scope and Application
The Customs Act 1901, specifically under Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders apply to particular goods and result in a lower rate of customs duty for those goods, as opposed to the general duty rates set out in the Customs Tariff Act 1995. The application process for a TCO requires the applicant to demonstrate that the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for TCOs, and that no substitutable goods are produced in Australia in the ordinary course of business. Once the core criteria are met, the CEO is obligated to issue a written TCO. The TCO applies to the specific goods identified in the order and the geographic scope is limited to Australia. The rights of parties other than the Commonwealth are protected, ensuring that the TCO does not disadvantage or impose liabilities on those parties for actions taken prior to the TCO’s registration. Subordinate instruments may extend or clarify the application of the TCO provisions, although no such instruments are noted in the explanatory statement.
Key Provisions
The Customs Act 1901, specifically under Part XVA, establishes the framework for Tariff Concession Orders (TCOs) which are designed to lower customs duty rates for certain goods. A TCO can be applied for by any person under section 269F, provided the goods in question are not those specified in section 269SJ which are ineligible for such concessions. The Chief Executive Officer of Customs (CEO) evaluates the application against the core criteria outlined in sections 269C and 269B. If the application is found to meet these criteria, the CEO must issue a TCO, which is a written order that specifies the goods and the applicable customs duty rate from Schedule 4 of the Customs Tariff Act 1995. For example, TCO No. 0612794, issued on 27 October 2006, applies to certain cotton drawsheets, reducing their duty from 17.5% to free, based on the CEO’s determination that no substitutable goods were produced in Australia.
The Act imposes specific obligations on both the CEO and applicants. The CEO must ensure that the application is assessed against the core criteria and that a TCO is made if these are met. Furthermore, the CEO is required to publish a notice in the Gazette (subsection 269K(1)) inviting any interested party to submit reasons why the TCO should not be granted. If no submissions are received, the CEO proceeds with the order. Conversely, applicants must submit a valid application that demonstrates the absence of substitutable goods produced in Australia.
Breaching the requirements of the Customs Act 1901 can result in both civil and criminal consequences. For instance, incorrect or misleading information in a TCO application could be considered an offence under section 236 of the Act, potentially leading to a maximum penalty of $22,200 or imprisonment for two years, or both. Failure to comply with the terms of a TCO, such as improperly claiming tariff concessions, could also lead to penalties or legal action under the Act. Additionally, the Act ensures that the rights of any person other than the Commonwealth are not adversely affected by the issuance of a TCO, thus maintaining a balance between tariff concessions and the protection of legitimate interests.