EXPLANATORY STATEMENT

Tariff Concession Instrument No. 0507917

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 269 SA(2) of the Act applies in circumstances where the local production of substitutable goods ceases after a TCO application is lodged, but before a decision has been made in relation to the application. In such circumstances, if the CEO is satisfied that the core criteria would have been met had the TCO application been lodged on the day local production ceased, then the CEO must make a TCO which comes into force from the day on which local production ceased (the production close-down date).

Doranda Ltd applied for a TCO in respect of certain polypropylene and/or polyethylene fabric on 23 June 2005 (Doranda’s application). Gale Pacific Ltd objected to Doranda’s application on the basis that Gale Pacific Ltd manufactured substitutable goods in respect of the goods subject of the application. For that reason, the CEO’s delegate decided on 11 January 2006 that the application did not meet the core criteria.

Doranda Ltd sought a reconsideration of the decision dated 11 January 2006. One being satisfied that Gale Pacific Ltd ceased to manufacture substitutable goods on 31 December 2005, the CEO’s delegate substituted the original decision dated 11 January 2006 with a decision that the CEO’s delegate must make a TCO in respect of Doranda’s application under subsection 269SA(2) of the Act. .

Instrument

TCO No 0507917 was made on 21 April 2006.  It declares that those certain polypropylene and/or polyethylene 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 10%.  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.  One submission objecting to the TCO application was received from Gale Pacific Ltd.

Commencement

Subsection 269SA(2) relevantly provides that a TCO is taken to have come into force from the production close-down date. TCO No. 0507917 is therefore taken to have come into force on 1 January 2006. 

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.