EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721918
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.
Australian Weaving Mills Pty Ltd applied for a TCO in respect of certain single combed cotton yarn on 20 December 2007.
Instrument
TCO No 0721918 was made on 14 March 2008. It declares that those certain single combed cotton 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. 0721918 is taken to have come into force on 20 December 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 was enacted to provide a comprehensive framework for the administration of customs duties and related matters in Australia. The Act, overseen by the Australian Parliament, was introduced to address the need for a structured approach to managing customs and excise duties, facilitating international trade, and protecting domestic industries. Part XVA of the Customs Act 1901 establishes a scheme for Tariff Concession Orders (TCOs), allowing the Chief Executive Officer of Customs to grant lower rates of customs duty on certain goods. This mechanism aims to support Australian industries by reducing the cost of importing specific goods, provided that no substitutable goods are produced domestically. The policy objective is to ensure that Australian businesses can remain competitive without being unduly burdened by high customs duties on necessary imports.
Scope and Application
The Customs Act 1901 applies to individuals and entities engaged in the import and export of goods in Australia, governing the assessment and collection of customs duty. The Act operates across the Commonwealth of Australia, regulating the import and export activities of individuals, businesses, and other entities involved in cross-border trade. The Act includes provisions for the creation of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs may grant concessions on the rates of customs duty for certain goods, provided specific criteria are met. The application of the Act is not limited to any particular industry or transaction but encompasses a broad range of goods and activities associated with international trade. The Act's application extends to any goods not specified in section 269SJ, which lists goods that cannot be subject to a TCO. The Act allows for the creation of subordinate instruments to further define the scope and application of TCOs. These instruments can provide additional details on the process for applying for a TCO, the criteria for granting concessions, and the procedures for reviewing and revoking TCOs. The Act’s provisions ensure that the rights of persons other than the Commonwealth are protected, meaning that the Act does not retroactively impose liabilities or disadvantage individuals or entities in respect of actions taken before the TCO's effective date.
Key Provisions
The main operative sections of this instrument are sections 269C, 269F, 269P, and 269S, among others (subsections 269K(1) and 269S(1) in particular). Section 269F enables an application for a Tariff Concession Order (TCO) to be made to the Chief Executive Officer of Customs (CEO) by any person (section 269F(1)). If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ, they must then decide whether the application meets the core criteria (subsection 269F(2)). A TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C). If the CEO is satisfied that the application meets the core criteria, they 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 applies (subsection 269P(3)).
The obligations and requirements the Act imposes on the parties or entities it governs include, firstly, the CEO must make a decision on a TCO application in line with the provisions of section 269F (subsection 269F(2)). The CEO must publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO (subsection 269K(1)). The CEO is also required to take into account the terms of section 269S, which 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 (subsection 269S(1)). 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 (section 269ZC).
Any offences, penalties, or civil/criminal consequences for breach, including maximum penalties where stated, are not specified in the Act. However, the Act does provide that the CEO must make a decision on a TCO application in line with the provisions of section 269F (subsection 269F(2)). If the CEO fails to make a decision in accordance with the Act, they may be subject to legal action by the applicant or any other interested party. Further, the CEO must publish a notice in the Gazette inviting any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO (subsection 269K(1)). If the CEO fails to publish such a notice, they may be subject to legal action by the applicant or any other interested party. Finally, the Act provides that 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 (section 269ZC). If the CEO fails to comply with this requirement, they may be subject to legal action by the applicant or any other interested party.