EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0718991
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.
Melbatex Pty Ltd applied for a TCO in respect of certain folded yarns on 15 November 2007.
Instrument
TCO No 0718991 was made on 30 January 2008. It declares that those certain folded 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. 0718991 is taken to have come into force on 15 November 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 peron 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 Parliament of Australia, establishes a framework for the administration of customs and excise through the Australian Border Force, which includes the authority for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs). These TCOs provide a reduced rate of customs duty on specified goods. The Tariff Concession Instrument No. 0718991, issued under the authority of this Act, was introduced to address the specific need of Melbatex Pty Ltd for tariff concessions on certain folded yarns. The CEO determined that no substitutable goods were produced in Australia for these folded yarns, thus satisfying the core criteria set out in section 269C of the Customs Act 1901. Consequently, the CEO issued the TCO, reducing the duty rate from the general 5% to free, effective from the date the application was lodged, 15 November 2007. The policy objective of this TCO is to ensure that Australian importers of the specified folded yarns benefit from a reduced duty rate, potentially leading to cost savings and increased competitiveness in the market.
Scope and Application
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCOs) can be issued, allowing for a lower rate of customs duty on specified goods. Specifically, Part XVA of the Act empowers the Chief Executive Officer of Customs to grant TCOs to applicants, provided that the goods in question are not listed in section 269SJ of the Act, which prohibits certain goods from being subject to a TCO. An application for a TCO will be considered if, on the date of the application, no substitutable goods are being produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. In the case of TCO No. 0718991, the CEO determined that Melbatex Pty Ltd’s application for tariff concessions on certain folded yarns met these criteria, resulting in the issuance of the TCO on 30 January 2008, which applied to the goods from 15 November 2007. The CEO is required to publish a notice of the application in the Gazette, inviting submissions from interested parties; however, in this instance, no submissions were received. The TCO applies nationally and does not disadvantage any existing rights holders or impose new liabilities, while providing benefits to importers of the specified goods.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically under Part XVA, allow the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCOs) for goods upon application (section 269F). These orders apply a lower rate of customs duty to the specified goods. For a TCO to be made, the application must meet the core criteria, which include the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The definition of key terms such as 'substitutable goods' and 'ordinary course of business' are provided in sections 269D, 269E, and 269F of the Act. If the CEO is satisfied that the application meets these criteria, they must issue a TCO (section 269P(3)).
The Customs Act 1901 imposes certain obligations on applicants and the CEO. An applicant must submit a valid application to the CEO for a TCO, ensuring that the goods do not fall under the prohibited categories specified in section 269SJ. The CEO, upon accepting a valid application, must publish a notice in the Gazette inviting any person who believes there are reasons against making the TCO to submit a submission (subsection 269K(1)). The CEO must also consider any submissions received and decide whether to issue a TCO based on the core criteria. In the case of TCO No. 0718991, no submissions were received, allowing the CEO to proceed with the order.
There are no specific offences outlined in the Customs Act 1901 regarding TCOs; however, breaches of related customs laws can lead to various penalties. Customs duty is a key focus, and failure to comply with customs regulations, such as incorrectly applying for a TCO or attempting to evade duty, can result in civil or criminal penalties. The maximum penalties for serious breaches can include fines and imprisonment, depending on the severity of the offence. The Act provides a framework for these penalties, but the specifics would be detailed in other relevant legislation and regulations.
The TCO No. 0718991, which was made on 30 January 2008, declares that certain folded yarns are subject to a lower customs duty rate of free, as opposed to the general rate of 5%. This TCO came into effect on the date the application was lodged, 15 November 2007. Importantly, the TCO does not retroactively affect any rights or impose liabilities on any person other than the Commonwealth, thereby protecting the interests of those who imported the goods before the TCO was registered. Importers can apply for a refund of duty on goods imported since the effective date of the TCO under paragraph 126(1)(r) of the Regulations.