EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1043536
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 1043536 was made on 20 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. 1043536 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 a comprehensive framework for the regulation of customs and excise in Australia. It was introduced to address the need for a cohesive legal structure to manage the import and export of goods, and to ensure the proper collection of duties and taxes. The Act is administered by the Parliament of Australia and its policy objective is to facilitate international trade while also protecting the revenue and economic interests of the nation. One of the mechanisms within the Act is the establishment of Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on specific goods, provided certain criteria are met. This system aims to support Australian industries by making imported goods more competitive, thereby promoting economic growth and consumer benefits. The explanatory statement outlines the process and criteria for the application and implementation of TCOs, ensuring transparency and public participation in the decision-making process.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the procedure for making Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO). This legislation applies to individuals or entities seeking tariff concessions for specific goods, ensuring that such concessions are granted only if certain criteria are met. The primary criterion is that, on the date the application is lodged, no substitutable goods should be produced in Australia in the ordinary course of business. This requirement is laid out in sections 269C and 269D of the Act, which define terms such as 'goods produced in Australia' and 'ordinary course of business'. The TCO mechanism is designed to provide relief on customs duties for goods that do not have Australian substitutes, thus encouraging trade and economic efficiency. The geographic reach of this legislation is national, as it applies across Australia and is overseen by the Commonwealth authority. Notably, the Act excludes certain goods from being subject to a TCO, as outlined in section 269SJ. The application process for TCOs is further detailed in the Customs Tariff Act 1995, which prescribes the rates of duty applicable to goods. Once a TCO is made, it comes into effect from the date the application is lodged, as per subsection 269S(1) of the Customs Act.
Key Provisions
The Customs Act 1901 (the Act) under Part XVA includes provisions for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities (section 269F). If the Chief Executive Officer of Customs (the CEO) is satisfied that the application does not pertain to goods specified in section 269SJ, they must assess whether the application meets the core criteria outlined in section 269C. A TCO application meets these criteria if, on the day it was lodged, no substitutable goods were produced in Australia in the ordinary course of business (section 269C).
Entities or individuals applying for a TCO must ensure that the goods in question are not substitutable by any goods produced domestically in the ordinary course of business. The CEO must then make a written order, declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, if satisfied that the application meets the criteria (subsection 269P(3)). For instance, TCO No. 1043536, made on 20 December 2010, declared that certain fabrics were subject to item 50 of Schedule 4 to the Tariff, with a duty rate of free, instead of the general rate of 5%.
The Act imposes certain obligations on the CEO, including publishing a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any interested party to submit objections to the TCO (subsection 269K(1)). In the case of TCO No. 1043536, no submissions were received in response to the notice published. The TCO is deemed to come into force on the date the application was lodged (subsection 269S(1)), thereby affecting the rights of importers beneficially by allowing them to apply for a refund of duty on goods imported since the TCO’s effective date (paragraph 126(1)(r) of the Regulations).
Under the Act, there are no specific offences or penalties outlined for breaches of the TCO provisions. However, any actions taken in reliance on a TCO that is later found to be invalid could potentially lead to civil or criminal consequences, depending on the specific circumstances and any related laws. The primary focus of the Act in this context is to ensure that the process for granting TCOs is transparent and allows for public consultation, thereby maintaining fairness and integrity in the application of customs duties.