EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0507514
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.
I.N.C. Corporation applied for a TCO in respect of certain black nonwoven fabric on 20 June 2005.
Instrument
TCO No 0507514 was made on 23 September 2005. It declares that the certain black nonwoven fabric is a product 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. 0507514 is taken to have come into force on 20 June 2005.
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 by the Australian Parliament to provide a regulatory framework governing the importation and exportation of goods in Australia. The Act establishes the process for making Tariff Concession Orders (TCOs), which provide for a lower rate of customs duty on certain goods, as a means to address specific economic and trade policy objectives. Enacted to facilitate smoother trade practices and economic growth, the Act allows the Chief Executive Officer of Customs to apply reduced customs duties on goods specified in a TCO, provided that no substitutable goods are produced in Australia. This mechanism aims to support industries by making imported goods more competitively priced relative to locally produced alternatives, thereby promoting economic efficiency and consumer choice. The policy objective underlying the TCO provision is to encourage trade by reducing the cost of imported goods, which in turn can stimulate economic activity and benefit consumers through lower prices.
Scope and Application
The Customs Act 1901, specifically under Part XVA, establishes a framework for the creation of Tariff Concession Orders (TCOs) which are issued by the Chief Executive Officer of Customs. This legislation applies to individuals and entities seeking lower rates of customs duty on specific goods, provided these goods meet certain criteria. The application process requires that the goods in question are not listed in section 269SJ of the Act, which excludes certain items from tariff concessions. For a TCO to be issued, the CEO must determine that no substitutable goods were produced in Australia on the date the application was lodged, in accordance with definitions provided in sections 269D and 269E of the Act. The application process mandates public consultation, although in the case of TCO No. 0507514, no objections were received. The TCO applies nationwide and came into force on the date the application was submitted, 20 June 2005. It is important to note that this order does not adversely affect any rights or impose liabilities on individuals or entities other than the Commonwealth for actions taken prior to the TCO's registration.
Key Provisions
The key operative sections of the Tariff Concession Instrument No. 0507514 under the Customs Act 1901, include sections 269F, 269C, and 269P. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the application meets the core criteria set out in section 269C, the CEO must make a written order, a TCO, declaring the goods subject to a prescribed rate of customs duty (section 269P(3)). In this instance, the CEO made TCO No. 0507514, declaring that certain black nonwoven fabric is subject to a zero rate of duty instead of the general rate of 5% (Item 50 of Schedule 4 to the Customs Tariff Act 1995).
The Act imposes several obligations on parties involved with the TCO process. Firstly, the CEO must ensure that the application for a TCO meets the core criteria, specifically that no substitutable goods were produced in Australia at the time of application (section 269C). The CEO must also publish a notice in the Gazette inviting any interested parties to lodge a submission if they believe the TCO should not be made (subsection 269K(1)). Additionally, the CEO must decide whether to make the TCO within the prescribed timeframes, which in this case was fulfilled on 23 September 2005. Importers of the goods subject to the TCO have the right to apply for a refund of duty on goods imported since the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations).
Failure to comply with the requirements of the Customs Act 1901 or the associated Regulations could result in civil or criminal penalties. For instance, providing false or misleading information in an application for a TCO could be considered an offence under section 256 of the Customs Act 1901, which carries a maximum penalty of $10,000 or imprisonment for two years, or both. Similarly, contravening the conditions of a TCO could lead to penalties under section 135 of the Customs Act 1901, which carries a maximum penalty of $22,200 or imprisonment for two years, or both. It should be noted, however, that the Explanatory Statement does not specify any particular breaches or penalties related to TCO No. 0507514.