EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0709802
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 Limited applied for a TCO in respect of certain worsted spun wool yarn on 25 June 2007.
Instrument
TCO No 0709802 was made on 07 September 2007. It declares that those certain worsted spun wool 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. 0709802 is taken to have come into force on 25 June 2007.
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, enacted by the Australian Parliament, addresses the need for streamlined customs duties by providing a mechanism through which the Chief Executive Officer of Customs can issue Tariff Concession Orders (TCOs) to reduce duty rates on specific goods. This legislative framework allows for a more flexible approach to tariff imposition, aiming to support industries by making imported goods more competitively priced without substantial legislative amendments. The Tariff Concession Instrument No. 0709802, introduced under this Act, was made to provide a tariff concession for certain worsted spun wool yarns, effectively reducing the duty rate from 5% to free, thereby benefiting importers and potentially stimulating demand for these goods. The process involves rigorous checks to ensure that the concession does not disadvantage Australian producers by allowing concessions only when no substitutable goods are produced domestically.
Scope and Application
The Tariff Concession Instrument No. 0709802, made under Part XVA of the Customs Act 1901, applies to specific worsted spun wool yarns that were subject to an application for a Tariff Concession Order (TCO) by DPK Australia Pty Limited on 25 June 2007. The instrument was subsequently made by the Chief Executive Officer of Customs on 7 September 2007, declaring these yarns as goods to which a particular item of Schedule 4 to the Customs Tariff Act 1995 applies. This concession effectively grants a reduction in customs duty from the general rate of 5% to free, provided the application met the core criteria specified in the Customs Act. The legislation's application is confined to the geographic jurisdiction of Australia, impacting the importation of specified goods and the associated duty obligations. The scope of the TCO is limited to the specific goods identified in the application and does not extend to other goods or industries unless similarly applied for and approved. Any person or entity importing these specific yarns after the TCO's effective date of 25 June 2007 will benefit from the reduced duty rate. The TCO does not affect pre-existing rights or impose any new liabilities on persons other than the Commonwealth.
Key Provisions
The primary sections of this legislation, specifically Section 269F of the Customs Act 1901, allow a person to apply to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of certain goods. The application process is contingent on the goods not being specified in Section 269SJ of the Act, which outlines goods ineligible for a TCO. The CEO must then determine whether the application meets the core criteria stipulated in Section 269C, which includes ensuring that no substitutable goods were produced in Australia on the day the application was lodged. If the application satisfies these criteria, the CEO is obligated to issue a written TCO, as per Section 269P(3), specifying the reduced duty applicable to the goods in question. In this instance, DPK Australia Pty Limited successfully applied for a TCO on 25 June 2007, resulting in Instrument TCO No. 0709802, which was issued on 7 September 2007, and declared that certain worsted spun wool yarns would be subject to a free rate of duty, down from the general rate of 5%.
The obligations imposed by the Act on the parties involved are outlined in several sections. Firstly, the CEO has the responsibility to assess the validity of TCO applications, ensuring they meet the core criteria specified in Section 269C. This involves verifying that no substitutable goods were produced in Australia on the application date, as defined in Section 269D. Additionally, under Section 269K(1), the CEO must publish a notice in the Gazette inviting any interested parties to submit objections to the TCO. Should no objections be received, the CEO is then required to issue the TCO. The Act also mandates that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration, ensuring that it does not disadvantage any individual or impose liabilities for actions taken prior to the registration date.
Failure to comply with the provisions of the Customs Act 1901 and the associated regulations can result in both civil and criminal consequences. While the specific penalties for breaches are not detailed in the explanatory statement, the general penalties for contraventions of the Customs Act can include fines and imprisonment. For instance, Section 276 of the Act stipulates that penalties for breaches can include fines up to 10,000 penalty units and/or imprisonment for up to five years for individuals, and double those amounts for bodies corporate. The specific penalties would depend on the nature and severity of the breach, as well as any mitigating or aggravating factors. Moreover, the Act may also allow for the imposition of additional civil penalties for non-compliance with specific sections, which would be determined by the courts.