Customs Act 1901 - Specified Percentage of Total Factory Costs Determination No. 1 of 2005

Overview

The Specified Percentage Of Total Factory Costs Determination No 1 of 2005 was enacted in 2005 to address the issue of preferential treatment of goods under the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) for goods manufactured in member countries. The determination was made by the Chief Executive Officer of Customs under subsection 153L(4) of the Customs Act 1901, with the objective of providing Samoa with a temporary reduction in the specified percentage of total factory costs for wiring harnesses used in passenger motor vehicles. This was in response to a request from the Government of Samoa to reduce the specified percentage of total factory costs by ten percentage points for a two-year period. The determination specifies that the percentage of total factory costs for wiring harnesses classified to subheading 8544.30.00 of Schedule 3 to the Customs Tariff Act 1995, manufactured in Samoa and used in passenger motor vehicles, is 40%. This reduction was granted following consultation with industry, which indicated that no adverse effects were anticipated as there are no manufacturers of wiring harnesses in Australia. The determination is projected to result in a revenue reduction of $93,000 in duty and GST collection.

Scope and Application

The Specified Percentage Of Total Factory Costs Determination No 1 of 2005 applies to wiring harnesses claimed to be the manufacture of Samoa that are used in passenger motor vehicles and are classified under subheading 8544.30.00 of Schedule 3 to the Customs Tariff Act 1995. This determination is made in accordance with the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA) which provides preferential treatment to goods manufactured in member countries. The Act allows for a lesser percentage than the standard 50% of total factory costs to be specified for certain goods under specific conditions, and this determination reduces the specified percentage for Samoan wiring harnesses to 40% for a two-year period. This determination applies nationally across Australia and is effective from 24 October 2005 until 23 October 2007. The Determination is made under the authority of the Customs Act 1901 and is a subordinate instrument that extends the application of the primary Act to this specific circumstance. There are no stated exclusions or exemptions within the Determination itself, though it is noted that no Australian manufacturers of such wiring harnesses currently exist, and thus no adverse effects are anticipated from this reduction.

Key Provisions

The Specified Percentage of Total Factory Costs Determination No 1 of 2005 (the Determination) fundamentally modifies the percentage of total factory costs required for wiring harnesses to be considered a product of Samoa under the Customs Act 1901 (the Act). Specifically, Section 153L(4) of the Act is amended to state that, for wiring harnesses used in passenger motor vehicles and classified under subheading 8544.30.00 of Schedule 3 to the Customs Tariff Act 1995, a specified percentage of total factory costs of 40% is deemed sufficient for such goods to be recognised as Samoan manufacture, rather than the usual 50% (subsections 153L(2) and (4) of the Act). This is a reduction of ten percentage points for a temporary period, responding to a request from the Government of Samoa. The Determination imposes specific obligations on parties involved in the importation and manufacture of wiring harnesses. Importers and manufacturers must ensure that the wiring harnesses meet the 40% specified percentage of total factory costs as outlined in the Determination. This means that they need to provide evidence that at least 40% of the total factory costs were incurred in Samoa for these goods to qualify for preferential tariff treatment under SPARTECA. Additionally, Customs and Border Protection officers are tasked with verifying compliance with the Determination when assessing the origin of these goods. Failure to comply with the provisions of the Determination may result in penalties and legal consequences. While the explanatory statement does not explicitly detail the penalties, breaches of the Customs Act 1901 typically incur civil and criminal penalties. These may include fines, imprisonment, or both, depending on the severity and intent of the breach. The specific penalties would be determined according to the relevant sections of the Customs Act and any applicable regulations or subsidiary legislation.