EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043535
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.
W L Gore & Associates applied for a TCO in respect of certain fabrics on 23 September 2010.
Instrument
TCO No 1043535 was made on 23 December 2010. It declares that those certain fabrics 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. 1043535 is taken to have come into force on 23 September 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 was enacted to provide for the regulation of the importation and exportation of goods, among other things. The Act allows for the creation of Tariff Concession Orders (TCOs) to provide tariff concessions on certain goods, administered by the Chief Executive Officer of Customs (CEO). The Tariff Concession Instrument No. 1043535 was introduced to address the specific need for tariff concessions on certain fabrics, as applied for by W L Gore & Associates on 23 September 2010. This instrument was made on 23 December 2010, following a determination by the CEO that no substitutable goods were produced in Australia, thus meeting the core criteria set out in the Act. The instrument declares that the certain fabrics are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, with the general rate of duty being 5% and the rate for these goods under the TCO being free. The instrument took effect on the date of the application, 23 September 2010, and does not affect the rights of any person prior to its registration, instead benefiting importers by allowing them to apply for a refund of duty on goods imported since the commencement date.
Scope and Application
The Customs Act 1901, through its Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). These orders provide for lower rates of customs duty on specific goods, subject to certain conditions. A person may apply for a TCO if the goods in question are not specified in section 269SJ of the Act, which lists goods ineligible for such concessions. The CEO must assess whether the application meets core criteria, specifically if no substitutable goods were produced in Australia at the time of the application, as defined by sections 269C, 269D, and 269E. Upon meeting these criteria, the CEO issues a TCO specifying the applicable item in Schedule 4 of the Customs Tariff Act 1995, thereby altering the duty rate for those goods. For instance, TCO No. 1043535, made in response to an application from W L Gore & Associates regarding certain fabrics, resulted in these goods being subject to a duty rate of free, down from the general rate of 5%. The application process requires the CEO to publish a notice in the Gazette inviting any interested party to lodge submissions, though in the case of TCO No. 1043535, no submissions were received. The TCO takes effect from the date the application was lodged, as per subsection 269S(1) of the Act. Importantly, the TCO does not adversely affect the rights of any person as of the registration date and does not impose new liabilities on any person.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 1043535 under the Customs Act 1901 (section 269F) allow for the application of a Tariff Concession Order (TCO) to certain fabrics by interested parties, like W L Gore & Associates. This provision permits the Chief Executive Officer of Customs (CEO) to consider and potentially grant a TCO, reducing the customs duty on specified goods to zero if certain criteria are met. Section 269C outlines the core criteria that must be satisfied for the CEO to approve a TCO application, specifically requiring that no substitutable goods are produced in Australia on the date the application is lodged.
The Act imposes several obligations on the parties involved. For applicants, such as W L Gore & Associates, the obligation is to submit a valid application that meets the criteria set forth in section 269C. The CEO, on the other hand, is mandated to review the application, determine if it meets the core criteria, and if satisfied, make a written order declaring the goods subject to the TCO. Additionally, the CEO is required to publish a notice in the Gazette under section 269K(1) inviting submissions from any interested parties who might oppose the TCO, although in this case, no submissions were received.
Failure to comply with the provisions of the Customs Act 1901 can lead to significant consequences. While the explanatory statement does not explicitly detail specific offences or penalties for breach, it is implied that non-compliance with the Act’s provisions could result in legal actions. The penalties for breaches can vary but typically include fines and, in severe cases, imprisonment. The maximum penalties would be determined by the specific nature of the breach and relevant sections of the Customs Act 1901 or other related legislation. For example, fraudulent applications or misuse of TCOs could attract penalties under the Crimes Act 1914, which might include substantial fines or imprisonment terms.