Customs Amendment Regulations 2004 (No. 6) 2004 No. 364
EXPLANATORY STATEMENT
STATUTORY RULES 2004 NO. 364
Issued by the Authority of the Minister for Justice and Customs
Customs Act 1901
Customs Amendment Regulations 2004 (No. 6)
Subsection 270(1) of the Customs Act 1901 (the Act) provides, in part, that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Customs.
The purpose of the amending Regulations is to amend the Customs Regulations 1926 (the Principal Regulations) so that a person may apply for a Tariff Concession Order (TCO) for footwear uppers. If a TCO is made in respect of footwear uppers, a lower rate of customs duty would apply to them.
Part XVA of the Act sets out a scheme under which 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.
Paragraph 269SJ(1)(b) of the Act provides that the CEO must not make a TCO in respect of goods declared by the regulations to be goods to which a TCO should not extend. Paragraph 185(1)(b) of the Principal Regulations provides that for the purposes of subsection 269SJ(1) of the Act, a TCO should not extend to goods classified under a heading or subheading in column 2 of an item in Schedule 2 to the Principal Regulations unless the goods are listed in column 3 of the item as goods to which this restriction does not apply.
Item 30 of Schedule 2 to the Principal Regulations prevents a TCO being made in relation to goods classified to heading 6406 of Schedule 3 to the Customs Tariff Act 1995 except parts for ski-boots and cross-country ski footwear and wooden shanks for boots, shoes or slippers.
Heading 6406 covers "parts of footwear (including uppers whether or not attached to soles other than outer soles); removable in-soles, heel cushions and similar articles; gaiters, leggings and similar articles, and parts thereof'.
The amending Regulations include footwear uppers in column 3 of item 30 of Schedule 2 so that an importer of footwear uppers could apply for a TCO in relation to those goods.
The general rate of customs duty on footwear is currently 15% and on footwear uppers is 10%. However, the rate of customs duty on footwear uppers imported from certain developing countries including India and China is 5%. Hence, there is an advantage in importing footwear uppers from those developing countries to manufacture footwear in Australia rather than importing footwear. On 1 January 2005, the general rate for footwear will be reduced to 10% but the rate for footwear uppers from the relevant developing countries will remain at 5%. Hence, the advantage of importing footwear uppers from those countries to manufacture footwear in Australia may be diminished.
By removing the prohibition on applying for a TCO in respect of footwear uppers, a person importing those goods would be able to apply for a TCO and if a TCO is granted, footwear uppers will be able to be imported duty free.
This proposal is consistent with Government policy of encouraging investment and innovation in the footwear industry.
The amending Regulations allow a person to apply for a TCO only in respect of footwear uppers. A TCO may be granted only if on the day on which the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business.
The amending Regulations commence on the date of their notification in the Gazette.
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Overview
The Customs Amendment Regulations 2004 (No. 6), enacted by the Minister for Justice and Customs, address a gap in the Customs Regulations 1926 by allowing applications for Tariff Concession Orders (TCO) specifically for footwear uppers. This legislative amendment responds to a policy objective of encouraging investment and innovation in Australia’s footwear industry. By enabling the application for TCOs for footwear uppers, the amendment seeks to facilitate the importation of these goods at a reduced customs duty rate, which is particularly beneficial when sourced from specified developing countries where the duty rate is 5%, compared to the 10% general rate for footwear uppers. The Regulations align with broader governmental efforts to support industry growth by making it more cost-effective to import uppers for manufacturing footwear in Australia, thereby enhancing competitiveness and innovation within the sector.
Scope and Application
The Customs Amendment Regulations 2004 (No. 6) are an instrument under the Customs Act 1901 designed to enable the application for Tariff Concession Orders (TCO) for footwear uppers, thus facilitating a reduction in customs duty on these items. This regulatory change applies to individuals or entities involved in the importation of footwear uppers, particularly those in the footwear manufacturing industry within Australia, aiming to support and innovate in this sector. The regulations have a national reach, applying across Australia as they are subordinate to the Commonwealth Customs Act 1901. They do not extend to other types of goods or industries unless specified by further amendments. The primary exclusion within these regulations is that a TCO cannot be applied for goods classified under heading 6406 of the Customs Tariff Act 1995 unless they are parts for ski-boots, cross-country ski footwear, or wooden shanks for boots, shoes or slippers, which are explicitly listed as exceptions. These amending regulations specifically target footwear uppers, allowing an importer to apply for a TCO if no substitutable goods are produced in Australia, thereby potentially importing these uppers duty-free, which aligns with the government's policy to foster investment and innovation in the footwear industry.
Key Provisions
The Customs Amendment Regulations 2004 (No. 6) primarily amend the Customs Regulations 1926 (referred to as the Principal Regulations) to allow for the application of Tariff Concession Orders (TCO) in respect of footwear uppers. This means that an importer can now apply for a TCO for footwear uppers, which, if granted, would allow these items to be imported duty-free (Section 269SJ(1)(b) of the Customs Act 1901). Under the Customs Act, a TCO can only be made if certain conditions are met, including the absence of substitutable goods being produced in Australia on the day the application is made (Subsection 270(1) of the Customs Act 1901).
The obligations imposed by these Regulations are primarily on the importer seeking to apply for a TCO for footwear uppers. The importer must ensure that no substitutable goods are being produced in Australia on the day the application is made, as this is a prerequisite for the grant of a TCO. Additionally, the importer must comply with all other relevant provisions of the Customs Act and the Customs Regulations 1926. Failure to meet these conditions or any other regulatory requirements could result in the application being rejected.
Failure to comply with the requirements set out in the Customs Act or the Customs Regulations 1926 can lead to significant consequences. For example, if an importer falsely claims that no substitutable goods are produced in Australia, they may be subject to penalties under the Customs Act for providing false or misleading information. The specific penalties for breaches can include substantial fines and, in severe cases, criminal charges. The maximum penalties for such offences are prescribed in the Customs Act and can vary depending on the nature and severity of the breach. It is essential for all parties involved to adhere to the stipulated requirements to avoid these adverse outcomes.