EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1010160
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.
Hunt Textiles applied for a TCO in respect of certain knitting yarns on 26 February 2010.
Instrument
TCO No 1010160 was made on 21 May 2010. It declares that those certain knitting 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. 1010160 is taken to have come into force on 26 February 2010.
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, provides for the regulation of customs duties and related matters. To address the need for tariff concessions in specific circumstances, the Act allows for the creation of Tariff Concession Orders (TCOs) through the Chief Executive Officer of Customs. The Tariff Concession Instrument No. 1010160, made on 21 May 2010, was introduced to provide tariff concessions on certain knitting yarns, reducing their duty rate from 5% to free, after Hunt Textiles applied for such a concession on 26 February 2010. The Chief Executive Officer of Customs made this order upon being satisfied that no substitutable goods were produced in Australia. The instrument was published in the Gazette with an invitation for submissions, none of which were received. The order is effective from the date of the application and benefits importers by allowing them to apply for duty refunds on imports made since this date, without imposing any liabilities on any person.
Scope and Application
The Tariff Concession Instrument No. 1010160 applies to specific goods, namely certain knitting yarns, which are subject to a Tariff Concession Order (TCO) under Part XVA of the Customs Act 1901. This Act applies to entities or individuals who import these specified goods, as the TCO aims to provide tariff concessions by reducing the customs duty rate to zero. The geographic reach of the Act is national, given that it operates under the Commonwealth legislation, thereby affecting all importers across Australia. The Act excludes goods that are specified in section 269SJ of the Customs Act 1901, which are ineligible for a TCO. Additionally, the CEO of Customs must determine whether the application for a TCO meets the core criteria as outlined in sections 269C and 269S of the Act, including the condition that no substitutable goods are produced in Australia at the time of the application. The TCO becomes effective on the date the application is lodged, but it does not retroactively affect any rights or liabilities of persons other than the Commonwealth, nor does it impose new liabilities on any person.
Key Provisions
The main operative sections of the Customs Act 1901, specifically within Part XVA, establish the framework for Tariff Concession Orders (TCOs) (sections 269C, 269F, and 269P). Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods. Section 269C sets out the core criteria that must be met for the application to be considered, including the absence of substitutable goods produced in Australia on the day the application was lodged (section 269D defines "goods produced in Australia," section 269E defines "ordinary course of business," and section 269F defines "substitutable goods"). If the CEO determines that the application meets these criteria, they are required to make a TCO, specifying the reduced duty rate applicable to the goods (section 269P(3)).
The Act imposes several obligations and requirements on the parties involved. The CEO must publish a notice in the Gazette once a TCO application is accepted as valid, inviting any person who believes the TCO should not be made to submit their reasons (subsection 269K(1)). Hunt Textiles, as the applicant, must ensure their application meets the core criteria outlined in the Act. Additionally, the CEO is mandated to consider the application in accordance with the Act and decide whether to grant the TCO based on the criteria specified.
There are no specific offences, penalties, or civil/criminal consequences mentioned in the Act for breach of the TCO provisions. However, the Act does ensure that the TCO does not affect the rights of any person, other than the Commonwealth, as at the date of registration to the detriment of that person or impose liabilities in respect of anything done or omitted to be done before the registration date (subsection 269S(1)). Importers of the goods subject to the TCO can apply for a refund of duty on goods imported since the effective date of the TCO (paragraph 126(1)(r) of the Regulations). This ensures that while the TCO provides tariff concessions, it does not lead to any retroactive liabilities or disadvantages for any party.