EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0801914
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.
Albany International Pty Ltd applied for a TCO in respect of certain yarn on 1 February 2008.
Instrument
TCO No 0801914 was made on 11 April 2008. It declares that those certain yarn 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. 0801914 is taken to have come into force on 1 February 2008.
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 amended to include the creation of Tariff Concession Orders (TCOs) through Part XVA, which allows the Chief Executive Officer of Customs to reduce customs duty on certain goods if specific criteria are met. Enacted by the Australian Parliament, this legislation addresses the gap in duty concessions for goods where no substitutable goods are produced in Australia. The policy objective is to provide relief on customs duty to encourage the importation of goods that are not domestically produced, thereby supporting trade and economic activities. The explanatory statement for Tariff Concession Instrument No. 0801914, made on 11 April 2008, outlines the process whereby Albany International Pty Ltd successfully applied for a TCO concerning certain yarn, resulting in a reduction of the duty rate from 5% to free. This change was effective from 1 February 2008, and no submissions were received in opposition to the TCO during the consultation period.
Scope and Application
The Customs Act 1901, specifically through its Part XVA, provides the framework for Tariff Concession Orders (TCOs) which allow for a lower rate of customs duty on certain goods. This legislation applies to entities and individuals seeking tariff concessions for goods that are not being produced in Australia in the ordinary course of business. The application process is overseen by the Chief Executive Officer of Customs, who is mandated to assess applications against specific core criteria, such as the absence of substitutable goods being produced domestically. The geographic reach of this legislation is national, as it pertains to customs duty across Australia, and it affects all industries involved in the importation of the specified goods. The application of TCOs is further refined by the Customs Tariff Act 1995, which prescribes the duty rates applicable to the goods. Notably, the TCO does not retroactively affect any rights or impose liabilities for actions taken before its effective date, ensuring that only future transactions are subject to the new duty rates. The process also includes a requirement for public consultation, though in this instance, no submissions were received in response to the notice published in the Gazette.
Key Provisions
The main operative sections of this legislation include section 269F, which allows a person to apply to the CEO for a Tariff Concession Order (TCO) in respect of goods, and section 269C, which sets out the core criteria that must be met for a TCO application to be approved. Section 269P(3) mandates that if the CEO is satisfied that the application meets these core criteria, they must make a written order declaring that the goods the subject of the application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269K(1) requires the CEO to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made. Finally, section 269S(1) specifies that a TCO comes into force on the day the application for the TCO was lodged.
The obligations and requirements imposed by the Act on the parties it governs include the necessity for the CEO to determine whether a TCO application meets the core criteria outlined in section 269C. This involves assessing whether no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged. The CEO must also ensure that a notice is published in the Gazette as soon as practicable after accepting a TCO application as valid, inviting submissions from any interested parties. Additionally, the Act requires that a TCO does not affect the rights of a person as at the date of registration in a way that disadvantages that person or imposes liabilities in respect of actions taken before the date of registration.
Breaching the provisions of the Customs Act 1901 can result in both civil and criminal consequences. Civil penalties can include fines and other monetary penalties, while criminal penalties can include imprisonment. The maximum penalties for breaches are not explicitly stated in the explanatory statement, but generally, the severity of the penalty would depend on the nature and extent of the breach. For instance, knowingly making a false statement or providing misleading information in a TCO application could result in criminal charges. Similarly, failing to comply with the requirements for publishing notices in the Gazette or ignoring the core criteria for approving a TCO could also lead to legal repercussions. The precise penalties would be determined by the courts based on the specific circumstances of each case.