EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0830251
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.
Gale Pacific Ltd applied for a TCO in respect of certain fabric on 09 September 2008.
Instrument
TCO No 0830251 was made on 28 November 2008. It declares that those certain fabric 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 10%. 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. 0830251 is taken to have come into force on 09 September 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, enacted by the Parliament of Australia, established a framework for the imposition of customs duties on imported goods. Part XVA of this Act allows the Chief Executive Officer of Customs (CEO) to grant Tariff Concession Orders (TCO) to provide tariff concessions on certain goods, addressing the need to incentivise the import of goods that are not produced domestically and to assist Australian businesses in their operations. The policy objective is to support economic efficiency and the competitiveness of Australian industries by ensuring that Australian businesses have access to a diverse range of imported goods at reduced tariff rates. The explanatory statement for Tariff Concession Instrument No. 0830251, issued under the Customs Act 1901, details the process by which the CEO assesses and approves TCO applications, ensuring that the concessions are granted only when no substitutable goods are produced in Australia. This legislative framework aims to provide tariff relief to importers of specified goods, thereby facilitating their access to cheaper inputs or products, ultimately supporting the broader economic interests of Australia.
Scope and Application
The Customs Act 1901, through its Part XVA, outlines the framework for the creation of Tariff Concession Orders (TCOs) which are administered by the Chief Executive Officer of Customs. The Act allows for the application of a lower rate of customs duty on goods that are the subject of a TCO, provided the application meets the core criteria specified under section 269C. This means that a TCO can be issued if, on the date the application was lodged, there were no substitutable goods produced in Australia in the ordinary course of business. The application process requires the applicant to demonstrate that the goods in question are not restricted under section 269SJ and that they meet the specific criteria concerning the production of goods in Australia and the definition of substitutable goods. Once the CEO is satisfied with the application, a written TCO is issued specifying the applicable item of Schedule 4 to the Customs Tariff Act 1995. This instrument applies to any person or entity that imports the specified goods and aims to provide relief from the general customs duty rate by setting it to free for the goods covered by the TCO. The application and effect of a TCO are bound by the jurisdictional reach of the Commonwealth, ensuring its application across all states and territories within Australia.
Key Provisions
The main operative sections of this legislation are sections 269F, 269C, 269B, and 269P of the Customs Act 1901. Section 269F allows for an application to be made to the Chief Executive Officer of Customs (CEO) for a Tariff Concession Order (TCO) in respect of goods. If the CEO is satisfied that the application meets the core criteria, such as there being no substitutable goods produced in Australia (section 269C), the CEO must make a TCO (section 269P). These sections outline the process for establishing tariff concessions for specific goods, which can significantly reduce the customs duty otherwise applicable.
The Customs Act 1901 imposes several obligations on parties applying for a TCO. Firstly, the applicant must ensure that their application is lodged with the CEO and includes all necessary information to demonstrate that the core criteria are met (section 269F). The CEO, on receiving a valid application, is obligated to consider whether the core criteria are satisfied, including verifying that no substitutable goods are produced in Australia (section 269C). If the CEO is satisfied, they must make a written TCO declaring that the specified goods are subject to a lower rate of duty (section 269P). Additionally, the CEO is required to publish a notice in the Gazette inviting any interested parties to lodge submissions against the TCO (subsection 269K(1)).
Failure to comply with the requirements of the Customs Act 1901 can result in various penalties and consequences. While the explanatory statement does not explicitly detail penalties for non-compliance with the TCO provisions, it is reasonable to infer that breaches of the Act could lead to civil or criminal consequences, depending on the nature and severity of the breach. Typically, breaches of customs regulations can result in fines and other sanctions under the relevant legislation. It is also important to note that the TCO itself does not impose any new liabilities on any person and does not affect the rights of persons as at the date of registration (subsection 269S(1)).
The instrument, TCO No. 0830251, effectively reduces the customs duty on certain fabric from 10% to free, provided that the CEO is satisfied that no substitutable goods are produced in Australia. This concession is beneficial to importers who can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations). The TCO does not impose any new liabilities on any person and respects the existing rights of persons as at the date of registration. The TCO came into force on the same day the application was lodged, 09 September 2008.