EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1027486
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.
All Filtration Technologies Australia Pty Ltd applied for a TCO in respect of certain yarn on 21 June 2010.
Instrument
TCO No 1027486 was made on 20 September 2010. 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. 1027486 is taken to have come into force on 21 June 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 Tariff Concession Instrument No. 1027486, enacted under the Customs Act 1901, addresses the problem of ensuring that Australian businesses are not placed at a competitive disadvantage when importing specific goods for which no substitutable products are produced domestically. This instrument was introduced to streamline the process by which the Chief Executive Officer of Customs can grant tariff concessions, thereby encouraging the importation of certain goods that are not locally manufactured. This was achieved by allowing the CEO to make a Tariff Concession Order (TCO) for goods not specified in section 269SJ of the Act, provided that no substitutable goods were produced in Australia on the day the application was lodged. The objective is to facilitate trade by reducing the customs duty for specific goods, in this case, certain yarn, which now attracts a duty rate of free, down from the general rate of 5%.
The Tariff Concession Instrument was created by the CEO under the authority granted by section 269F of the Customs Act 1901, which allows for the application of tariff concessions to be considered and approved. The CEO's decision to grant the concession in this instance was based on the absence of substitutable goods produced in Australia, as outlined in section 269C of the Act. The instrument came into force on 21 June 2010, the date the application was lodged, without any adverse effects on existing rights or liabilities of any person other than the Commonwealth, and it positively impacts the rights of importers by potentially allowing them to seek refunds on duties paid prior to the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 1027486, made under Part XVA of the Customs Act 1901, applies to the concession of customs duty for certain yarn. The instrument was enacted to provide a lower rate of customs duty for specified goods, in this case, certain yarn, which are declared to be subject to a Tariff Concession Order (TCO). The TCO is applicable to those particular goods, and the application of this concession is governed by the conditions set out in the Customs Act 1901. The instrument extends to the entire Commonwealth of Australia, impacting entities involved in the importation of the specified goods. Importantly, the Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ. The process involves an application to the Chief Executive Officer of Customs (CEO), who must determine if the application meets the core criteria, specifically that no substitutable goods are produced in Australia in the ordinary course of business. Upon meeting these criteria, the CEO is mandated to issue a written TCO. This particular TCO, No. 1027486, was made effective from 21 June 2010, the date on which the application was lodged, and benefits the rights of importers by potentially allowing them to apply for a refund of duty on the specified goods imported since the effective date. The instrument does not impose any liabilities on any person and does not affect the rights of any person as at the date of registration concerning anything done or omitted before that date.
Key Provisions
The main provisions of Tariff Concession Instrument No. 1027486 under the Customs Act 1901 (section 269F) allow for the application of a Tariff Concession Order (TCO) to reduce or eliminate customs duty on specific goods. For instance, section 269C requires that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269E). The TCO itself, such as TCO No. 1027486, specifies that certain yarn are subject to a duty rate of free instead of the general rate of 5% (section 269P(3)). The TCO comes into effect on the day the application was lodged (subsection 269S(1)).
The obligations imposed by this Act on the parties involved include the requirement for applicants, such as All Filtration Technologies Australia Pty Ltd, to ensure that their applications meet the core criteria and that no substitutable goods are produced in Australia. The Chief Executive Officer of Customs (CEO) has the duty to assess these applications and, if satisfied, to make a written TCO (subsection 269K(1)). The CEO must also publish a notice in the Gazette inviting submissions from interested parties, although in this case, no submissions were received. Furthermore, the CEO is obligated to ensure that the TCO does not affect the rights of persons other than the Commonwealth, ensuring that it does not disadvantage anyone or impose liabilities in respect of actions taken before the TCO's registration.
Failure to comply with the requirements of the Customs Act 1901 can result in various civil and criminal consequences. For example, section 269G of the Act outlines penalties for false or misleading statements made in an application for a TCO, which can lead to fines. Although the specific penalties are not detailed in the explanatory statement, the potential penalties for breaches of the Customs Act can be severe, often involving fines that can extend into the thousands of Australian dollars. Additionally, the Act may impose further administrative or legal consequences for non-compliance, which could include legal actions to recover unpaid duties or other related penalties.