EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0712197
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 0712197 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. 0712197 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 Tariff Concession Instrument No. 0712197 was enacted in 2007 under the Customs Act 1901 to address the need for tariff concessions on specific goods. This legislation enables the Chief Executive Officer of Customs to issue Tariff Concession Orders, which provide lower rates of customs duty on goods that meet certain criteria, such as the absence of substitutable goods produced in Australia. Macquarie Textiles Group Ltd applied for such a concession on certain wool and synthetic fibre yarns, leading to the creation of Instrument TCO No. 0712197. The objective of this instrument is to reduce the duty on these goods from the general rate of 5% to 0%, thereby benefiting importers who can apply for duty refunds on goods imported since the commencement date of the order. The instrument was published in the Gazette with an invitation for submissions, none of which were received. Consequently, the order came into force on the date of the application, 2 August 2007, without affecting any existing rights or imposing new liabilities on persons other than the Commonwealth.
Scope and Application
The Tariff Concession Instrument No. 0712197, made under the Customs Act 1901, applies to the specific wool and synthetic fibre yarns for which Macquarie Textiles Group Ltd applied, providing them with a concessionary rate of customs duty. The Act permits the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) for goods that are not substitutable by goods produced in Australia in the ordinary course of business. The application for a TCO must meet the core criteria as outlined in the Act, and the CEO must decide whether the application is valid and meets these criteria. The TCO instrument was registered on 19 October 2007, effective from 2 August 2007, the date the application was lodged, and it declares that the specified yarns are subject to a duty rate of 0% instead of the general rate of 5%. The rights of importers will be positively impacted as they can apply for a refund of duty on goods imported since the TCO's effective date, without any new liabilities imposed on any person.
Key Provisions
The primary operative sections of the Customs Act 1901, as referenced in the Explanatory Statement for Tariff Concession Instrument No. 0712197, are sections 269F, 269C, 269B, 269P(3), 269K(1), and 269S(1). Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of specific goods. The CEO must then determine whether the application meets the core criteria, outlined in sections 269C and 269B, which include conditions such as the absence of substitutable goods produced in Australia and the meaning of terms like 'goods produced in Australia' and 'ordinary course of business'. If the application meets these criteria, section 269P(3) mandates that the CEO make a written order, declaring the goods to which the TCO applies. The order must specify the prescribed item of Schedule 4 to the Customs Tariff Act 1995, as mentioned in section 269P(3). Section 269K(1) requires the CEO to publish a notice in the Gazette, inviting any interested parties to submit objections to the TCO. Finally, section 269S(1) specifies that a TCO is considered to have come into force on the day the application for the TCO was lodged.
The Customs Act 1901 imposes several obligations and requirements on the parties it governs. Firstly, the CEO of Customs is obligated to assess applications for TCOs against the core criteria stipulated in sections 269C and 269B. This involves ensuring that no substitutable goods are produced in Australia at the time the application is lodged. The CEO must also publish a notice in the Gazette, as per section 269K(1), inviting submissions from any interested parties regarding the proposed TCO. Furthermore, the CEO must make a written order if the application meets the core criteria, specifying the prescribed item of Schedule 4 to the Customs Tariff Act 1995, as stated in section 269P(3). The rights and liabilities of any person, other than the Commonwealth, are not adversely affected by the TCO, and importers may apply for a refund of duty on goods imported since the effective date of the TCO, as per paragraph 126(1)(r) of the Regulations.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the Explanatory Statement for breaches of the provisions under the Customs Act 1901 as they pertain to Tariff Concession Orders. However, it is important to note that any failure by the CEO to properly assess TCO applications or to publish notices in the Gazette as required by sections 269K(1) and 269P(3) could potentially lead to legal challenges or administrative actions. The Act does not specify maximum penalties for such breaches, but they could result in significant consequences, including financial losses for affected parties or the Commonwealth. Additionally, any misuse or fraud related to the TCO could lead to separate criminal charges under other relevant sections of the Customs Act 1901 or other applicable legislation.