EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0507654
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.
Freudenberg Pty Ltd applied for a TCO in respect of certain Embroidery Fabric on 21 June 2005.
Instrument
TCO No 0507654 was made on 9 September 2005. It declares that those certain Embroidery Fabric 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 0%.
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. 0507654 is taken to have come into force on 21 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 amended to include the Tariff Concession Instrument No. 0507654, enacted in 2005, to facilitate tariff concessions for specific goods that are not produced domestically in Australia. This legislative instrument was introduced to address the need for a streamlined process to provide tariff relief for imported goods where no substitutable Australian-made alternatives exist. The Tariff Concession Order (TCO) scheme, under which this instrument operates, allows the Chief Executive Officer of Customs to grant lower customs duty rates on goods that meet specified criteria, enhancing the competitiveness of imported goods in the Australian market. The policy objective of this measure is to support the efficient allocation of resources and to provide economic benefits to businesses by reducing the cost of imported goods, thus promoting trade and investment.
Scope and Application
The Customs Act 1901, specifically under Part XVA, allows for the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs (CEO) to reduce the customs duty on certain goods. The application for a TCO is made under section 269F of the Act, and if the CEO determines that the application meets the core criteria, such as the absence of substitutable goods produced in Australia as outlined in sections 269C and 269D, a TCO is issued. The TCO then applies a lower rate of customs duty to the specified goods, as demonstrated in Tariff Concession Instrument No. 0507654 for certain Embroidery Fabric. The application of the TCO does not adversely affect the rights of any person as at the date of registration and does not impose any liabilities on individuals other than the Commonwealth. The CEO must also publish a notice in the Gazette inviting submissions from any person who may object to the making of the TCO, though no objections were received in this instance. The TCO applies nationally across Australia and comes into effect on the date the application is lodged.
Key Provisions
The primary sections of the Customs Act 1901, specifically Part XVA, and the Tariff Concession Instrument No. 0507654, establish a framework through which Tariff Concession Orders (TCOs) can be made by the Chief Executive Officer of Customs (CEO) (sections 269F, 269C, 269B, and 269P). Section 269F allows any person to apply to the CEO for a TCO concerning specific goods, provided those goods are not excluded under section 269SJ. The CEO must determine if the application meets the core criteria, primarily whether no substitutable goods were produced in Australia on the day the application was lodged, as stipulated in section 269C. If the application meets these criteria, the CEO is mandated to issue a written TCO (section 269P(3)).
Under this legislation, the CEO has specific obligations. The CEO must ensure that the application for a TCO is valid and not for goods specified in section 269SJ, which lists exceptions such as cultural or security concerns. If the application is deemed valid, the CEO must publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not proceed, as per section 269K(1). In the case of TCO No. 0507654, the CEO did not receive any submissions opposing the concession, leading to the issuance of the TCO.
The act also sets forth the consequences for non-compliance or breaches. If an entity fails to adhere to the provisions of a TCO or any other related requirements, it may face legal repercussions. The penalties for breaches can include fines and imprisonment, although the specific maximum penalties are not detailed within the explanatory statement. Furthermore, any person who imports goods under the concession and subsequently fails to comply with the associated conditions may face additional penalties or the revocation of the concession.
In summary, the key provisions of this legislation, particularly sections 269F, 269C, and 269P, detail the process for applying for and issuing TCOs, ensuring that the goods in question are not substitutable by Australian-produced goods. The obligations on the CEO include validating applications, publishing notices for public submissions, and issuing TCOs if criteria are met. Breaches of the act or the terms of a TCO can lead to fines, imprisonment, or other civil and criminal penalties, although specific maximum penalties are not detailed in this explanatory statement.