EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712196
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.
Macquarie Textiles Group Ltd applied for a TCO in respect of certain wool and synthetic fibre yarns on 2 August 2007.
Instrument
TCO No 0712196 was made on 19 October 2007. It declares that those certain wool and synthetic fibre 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 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. 0712196 is taken to have come into force on 2 August 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, provides a framework for the administration of customs and excise in Australia. One aspect of this Act is the ability to make Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs can apply a lower rate of customs duty to certain goods. The problem this legislation addresses is the need for a mechanism to provide tariff relief on goods that are not produced domestically, thereby encouraging the importation of these goods and potentially benefiting consumers through lower prices. In the case of Tariff Concession Instrument No. 0712196, the policy objective was to provide tariff relief for certain wool and synthetic fibre yarns by reducing the customs duty on these goods from the general rate of 5% to 0%. This was achieved by the CEO of Customs determining that no substitutable goods were produced in Australia, thereby meeting the core criteria set out in the Customs Act. The instrument was introduced to ensure that importers of these specific goods could benefit from the reduced duty rate, effective from the date the application was lodged.
Scope and Application
The Customs Act 1901, specifically under Part XVA, provides the framework for Tariff Concession Orders (TCO) which can be made by the Chief Executive Officer of Customs (CEO). The Act applies to individuals or entities seeking a reduction in customs duty on imported goods, provided the goods are not specified in section 269SJ of the Act, which outlines goods ineligible for TCOs. A TCO is granted if the CEO determines that no substitutable goods are produced in Australia on the date of the application, as stipulated in section 269C. This concession can lead to a significant reduction in customs duty, as illustrated by TCO No. 0712196, which granted a 0% duty rate on certain wool and synthetic fibre yarns, down from the general rate of 5%. The application process requires public notice, inviting objections, though none were received for this particular TCO. The TCO applies nationwide, impacting importers by potentially entitling them to duty refunds for goods imported since the application date, without imposing any new liabilities. The CEO's authority to extend or restrict the application of TCOs is further governed by subordinate instruments under the Act.
Key Provisions
The main operative sections of this legislation involve the establishment and application of Tariff Concession Orders (TCO) under the Customs Act 1901 (the Act). Section 269F of the Act allows an individual or entity to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods (s. 269F). The CEO must consider whether the application meets the core criteria set out in section 269C, which requires, among other things, that no substitutable goods were produced in Australia on the day the application was lodged (s. 269C). If the CEO determines that the application meets these criteria, they are required to make a written order (the TCO) declaring the goods subject to a specific tariff item in the Customs Tariff Act 1995 (s. 269P(3)). The TCO also specifies the applicable rate of customs duty, which can differ from the general rate.
Entities and individuals governed by the Act have several obligations and requirements. They must ensure their applications for a TCO are lodged in accordance with the provisions of the Act, specifically those outlined in sections 269F and 269C. The CEO is mandated to review the application and assess whether it meets the core criteria, including verifying the production status of substitutable goods in Australia (s. 269K(1)). Once a TCO is made, it is crucial for importers and other stakeholders to understand the implications of the order, particularly in terms of duty refunds available under section 126 of the Customs Regulations 1995.
The Act imposes specific penalties and consequences for breaches. While the Explanatory Statement does not detail specific penalties, breaches of the Customs Act 1901 can lead to significant legal and financial repercussions. Generally, penalties for non-compliance with customs regulations can include fines and, in severe cases, imprisonment. The exact penalties would depend on the nature and severity of the breach, as well as any additional relevant legislation. Importers and other affected parties must ensure they adhere to the terms of any TCO to avoid potential legal consequences.