EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721919
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 double combed cotton yarn on 20 December 2007.
Instrument
TCO No 0721919 was made on 14 March 2008. It declares that those certain double 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. 0721919 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, enacted by the Australian Parliament, establishes a framework for imposing customs duties on imported goods. To address gaps in the duty regime and provide relief where appropriate, the Act includes provisions for Tariff Concession Orders (TCOs), which can reduce the duty payable on specific goods. These orders are made by the Chief Executive Officer of Customs (CEO) and apply when certain conditions, such as the absence of substitutable goods produced in Australia, are met. The explanatory statement for Tariff Concession Instrument No. 0721919, made in 2008, details the process by which Australian Weaving Mills Pty Ltd successfully applied for a TCO for certain double combed cotton yarns. The CEO's decision to grant the concession was based on the absence of substitutable goods in Australia, resulting in a reduction of the duty rate from 5% to free. The instrument came into force on the date of the application, 20 December 2007, and allows eligible importers to apply for duty refunds on goods imported since that date. This instrument ensures that the rights of importers are protected and that no new liabilities are imposed on any person.
Scope and Application
The Customs Act 1901 applies to the process of making Tariff Concession Orders (TCOs) through the provisions of Part XVA, allowing for lower rates of customs duty on specified goods. These concessions are granted by the Chief Executive Officer of Customs (CEO) upon application by a person, provided that the goods in question are not specified as ineligible under section 269SJ of the Act and meet the core criteria outlined in sections 269C and 269D. The application must demonstrate that no substitutable goods are produced in Australia in the ordinary course of business, with terms such as 'goods produced in Australia' and 'ordinary course of business' defined in sections 269D and 269E respectively. If the CEO is satisfied with the application, they must issue a TCO, as exemplified by Tariff Concession Instrument No. 0721919, which grants a tariff concession on certain double combed cotton yarns, resulting in a duty-free rate instead of the general rate of 5%. The CEO is also required to publish a notice in the Gazette, inviting any interested parties to submit objections, although in this case, no submissions were received. The TCO takes effect from the date the application was lodged, in this instance, 20 December 2007, and does not affect the rights of any person as they stood prior to the registration date, nor does it impose any new liabilities.
Key Provisions
The Customs Act 1901, through Part XVA, provides a framework for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) (section 269F). This legislation enables a lower rate of customs duty on goods that are the subject of a TCO. An application for a TCO can be made by any person, provided that the goods in question are not those specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO must then determine if the application meets the core criteria, which includes ensuring that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C). The definitions of "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269P respectively. If the CEO is satisfied that the application meets these criteria, they are required to issue a written order (TCO) that specifies the goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 applies (section 269P(3)).
The obligations imposed by this legislation on the parties involved primarily concern the CEO's duty to assess TCO applications against the core criteria and to publish notices in the Gazette inviting submissions from interested parties. If an application is deemed valid, the CEO must make a TCO if the criteria are met, and they must not make a TCO if they are not met. The CEO is also responsible for ensuring that the rights of non-Commonwealth entities are not adversely affected by the TCO. Importers, as beneficiaries of the TCO, are entitled to apply for refunds of duty on goods imported since the TCO is taken to have come into force, as per paragraph 126(1)(r) of the Regulations. The TCO does not impose any liabilities on any person and does not affect the rights of persons other than the Commonwealth in respect of actions taken before the TCO was registered.
Failure to comply with the requirements of the Customs Act 1901, including the provisions for making a TCO, could lead to various legal consequences. While the specific offences, penalties, and consequences for breach are not detailed in the explanatory statement, it is reasonable to infer that breaches of the Act's provisions could result in civil or criminal penalties. These could include fines or imprisonment, depending on the nature and severity of the breach. The maximum penalties would be determined by the specific section of the Act that is breached, and would need to be consulted in the full text of the legislation. The consequences for non-compliance are intended to ensure adherence to the statutory requirements and the proper administration of the customs duty system.