EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0902340
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.
Coman Textiles Pty Ltd applied for a TCO in respect of certain bedspread fabric on 21 January 2009.
Instrument
TCO No 0902340 was made on 17 April 2009. It declares that those certain bedspread 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. 0902340 is taken to have come into force on 21 January 2009.
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 by the Australian Parliament to manage the regulation of goods entering and leaving the country, including the imposition and collection of customs duty. One of the mechanisms provided by the Act is the Tariff Concession Order (TCO) scheme, which allows for the reduction or exemption of customs duty on specified goods under certain conditions. The explanatory statement for Tariff Concession Instrument No. 0902340, made in 2009, clarifies the application of this scheme to particular goods by reducing their customs duty rate. The instrument was enacted in response to an application by Coman Textiles Pty Ltd for tariff concessions on certain bedspread fabrics, where the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, thus meeting the core criteria for a TCO. This instrument not only facilitates the import of these goods at a lower duty rate but also ensures that the rights of importers are preserved and potentially benefited by allowing them to apply for refunds of duty paid before the concession took effect.
Scope and Application
The Tariff Concession Instrument No. 0902340, issued under the Customs Act 1901, applies to goods for which a Tariff Concession Order (TCO) has been applied and subsequently approved by the Chief Executive Officer of Customs. This legislation is specifically designed to address applications from entities seeking to reduce customs duty on imported goods, provided that certain conditions are met. These conditions include the absence of substitutable goods produced in Australia, as defined in the Act. The geographic reach of this legislation is national, as it pertains to the Commonwealth of Australia and its customs regulations. The Act does not specify any exclusions or exemptions but ensures that the rights of importers are not adversely affected by the introduction of the TCO, allowing them to apply for refunds of duties paid prior to the TCO's effective date. Additionally, the scope of the Act may be extended or modified through subordinate instruments, which can provide further clarification or specific details regarding the implementation and enforcement of the TCOs.
Key Provisions
The Customs Act 1901, specifically under Part XVA, facilitates the making of Tariff Concession Orders (TCOs) by the Chief Executive Officer (CEO) of Customs. Section 269F allows a person to apply to the CEO for a TCO in respect of goods. Provided the goods do not fall under the exceptions listed in section 269SJ, the CEO must assess the application against the core criteria in section 269C. This involves determining whether, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business, as defined by sections 269D and 269E.
If the application meets these criteria, the CEO is mandated under subsection 269P(3) to issue a written order, the TCO, specifying that the goods in question are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. The TCO specifies the tariff treatment of the goods, which in this case reduces the duty on certain bedspread fabric from 10% to free. Such orders directly benefit importers by potentially allowing them to claim refunds for duties paid on imports since the date the TCO is deemed to come into force, as per paragraph 126(1)(r) of the Regulations.
The Act imposes several obligations on the CEO. Under subsection 269K(1), the CEO must promptly publish a notice in the Gazette inviting submissions from any interested parties who may oppose the making of a TCO. Although no submissions were received in response to the notice for TCO No. 0902340, the CEO must still consider any submissions received. The CEO also has to ensure that the rights of third parties, apart from the Commonwealth, are not adversely affected by the TCO, and that no new liabilities are imposed on such parties.
The Customs Act 1901 does not explicitly outline specific offences or penalties for breaches related to TCOs. However, any failure by the CEO to properly follow the procedures outlined in the Act, such as neglecting to publish a notice in the Gazette or improperly assessing an application against the core criteria, could potentially lead to administrative or judicial review. The consequences of such a review could include the TCO being declared invalid or the CEO being required to take corrective action. Additionally, if a party is found to have acted in bad faith or misled the CEO in the application process, they could face legal consequences under other relevant laws.