EXPLANATORY STATEMENT
Tariff Concession Instrument No. 1050285
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.
Beaulieu of Australia Pty Ltd applied for a TCO in respect of certain carpet backing fabrics on 12 November 2010.
Instrument
TCO No 1050285 was made on 31 January 2011. It declares that those certain carpet backing 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. 1050285 is taken to have come into force on 12 November 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 Australian Parliament, established a framework for the regulation of customs and excise. This framework includes provisions for Tariff Concession Orders (TCOs) under Part XVA of the Act, which allow for the reduction or exemption of customs duty on certain goods. Enacted to address the gap in providing tariff relief for specific goods not produced in Australia, the Customs Act aims to facilitate trade by ensuring that such goods can enter the Australian market at reduced duty rates. The Chief Executive Officer of Customs has the authority to make these orders if the application meets core criteria, such as the absence of substitutable goods produced in Australia. The Tariff Concession Instrument No. 1050285, made on 31 January 2011, is an example of this legislative intent, providing a tariff concession for certain carpet backing fabrics. This measure ensures that importers of these goods can benefit from a lower duty rate, thereby promoting economic efficiency and fairness in trade.
Scope and Application
The Customs Act 1901 provides a framework for the application of Tariff Concession Orders (TCOs) through which the Chief Executive Officer of Customs may reduce the customs duty rate on specified goods. Specifically, TCO No. 1050285 applies to certain carpet backing fabrics, as Beaulieu of Australia Pty Ltd successfully applied for the concession on 12 November 2010. This order was made on 31 January 2011, applying from the date of the application, and specifies that these fabrics are subject to the customs duty rate outlined in item 50 of Schedule 4 to the Customs Tariff Act 1995, which is free of charge. The Act applies to any person who applies for a TCO, provided that the goods in question are not specified in section 269SJ of the Act and meet the core criteria set out in sections 269C, 269D, and 269E. The application process requires the CEO to ensure no substitutable goods are produced in Australia and mandates publication in the Gazette to invite submissions, which did not occur for this particular case. The concession does not affect existing rights or impose liabilities on individuals or entities for actions prior to the concession's effective date.
Key Provisions
The Customs Act 1901 (the Act) provides for the making of Tariff Concession Orders (TCOs) through Part XVA. When a person applies for a TCO in respect of goods (section 269F), the Chief Executive Officer of Customs (the CEO) must consider whether the application meets the core criteria (section 269C). These criteria include whether there are no substitutable goods produced in Australia on the day the application is lodged (section 269C). If the CEO is satisfied that the application meets the criteria, they must make a written order (section 269P(3)). The TCO specifies the goods and the prescribed item of Schedule 4 to the Customs Tariff Act 1995 that applies to them. For instance, Beaulieu of Australia Pty Ltd's application for certain carpet backing fabrics resulted in TCO No. 1050285, which declares that these fabrics are subject to item 50 of Schedule 4, with a duty rate of free instead of the general 5% rate.
Under the Act, the CEO has specific obligations when processing a TCO application. First, the CEO must publish a notice in the Gazette inviting any person who might oppose the TCO to lodge a submission (subsection 269K(1)). Although the CEO did not receive any submissions in response to the notice for TCO No. 1050285, this step is mandatory to ensure transparency and allow for objections. Additionally, once the application is accepted as valid, the TCO is taken to have come into force on the day the application was lodged (subsection 269S(1)). In this case, TCO No. 1050285 is effective from 12 November 2010. This commencement date ensures that the rights of parties are protected, and it does not disadvantage any person by imposing liabilities for actions taken before the TCO's effective date.
The Act also outlines the consequences for non-compliance with its provisions. While the explanatory statement does not specify detailed penalties, breaches of the Customs Act can lead to both civil and criminal penalties. For instance, failure to comply with customs regulations can result in fines, imprisonment, or both, depending on the severity and intent of the breach. The specific penalties can vary widely based on the nature of the offence, but they are designed to enforce compliance and protect the integrity of the customs system. It is essential for entities subject to the Act to adhere strictly to its requirements to avoid these potential consequences.