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.
Overview
The Customs Act 1901, enacted by the Parliament of Australia, addresses the need for tariff concessions on imported goods through Tariff Concession Orders (TCOs). This legislative framework, particularly as outlined in Part XVA, allows for the application of reduced customs duties on specified goods, provided certain criteria are met. The Tariff Concession Instrument No. 0507917, made under this Act, was introduced to provide relief to importers by reducing the duty on certain polypropylene and/or polyethylene fabric from 10% to 0%, effective from 1 January 2006. This measure was intended to benefit importers and ensure that the concession does not adversely affect any rights or impose new liabilities on persons other than the Commonwealth. The decision to grant the concession was based on the cessation of local production of substitutable goods, aligning with the policy objective of supporting import-dependent industries where local production has ceased.
Scope and Application
The Customs Act 1901, through its Part XVA, establishes a framework for the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) which allow for a reduced rate of customs duty on specified goods. These orders apply to goods that are not currently produced in Australia and for which substitutable goods do not exist. The application of TCOs is governed by specific criteria, including the cessation of local production of substitutable goods, and can be subject to objection by interested parties. The process for TCOs involves a public notice period for objections, and the orders themselves are effective from the date local production ceased, or from the date of their registration, whichever is earlier. The TCOs do not impose any retroactive liabilities on individuals or entities and may provide benefits such as duty refunds to importers of the specified goods. This legislative mechanism is instrumental in supporting Australian industries by potentially lowering import costs and maintaining competitive parity with locally produced goods.
Key Provisions
The primary operative sections of the Tariff Concession Instrument No. 0507917, under the Customs Act 1901, establish the framework for issuing Tariff Concession Orders (TCO) that reduce the customs duty on specified goods. Section 269F allows an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of goods. Section 269C stipulates the core criteria that must be met for the CEO to consider issuing a TCO, specifically that on the date the application is lodged, no substitutable goods are produced in Australia in the ordinary course of business. The instrument specifically pertains to polypropylene and/or polyethylene fabric, where the general duty rate is 10%, but under the TCO, this rate is reduced to 0%. This was effective from 1 January 2006, the date local production of substitutable goods ceased.
Under the Act, the CEO is obliged to assess the validity of TCO applications against the core criteria. If the application is for goods that are not specified in section 269SJ and no substitutable goods are produced in Australia on the date of the application, the CEO must make a TCO. In this case, the CEO was satisfied that Doranda Ltd's application met the criteria because the local production of substitutable goods ceased before the decision was made. Furthermore, section 269SA(2) allows the CEO to make a TCO if local production of substitutable goods ceased after the application was lodged but before the decision, provided the core criteria would have been met had the application been lodged on the date local production ceased. The CEO also has an obligation under section 269K(1) to publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made.
There are no explicit offences or penalties outlined in the Act or the Instrument for breaches related to TCOs. However, the implications of failing to meet the core criteria or making an incorrect decision could lead to legal challenges or disputes over the validity of the TCO. Additionally, while the instrument does not impose any liabilities, it does provide for the rights of importers to be beneficially affected, allowing them to apply for a refund of duty on goods imported since the TCO came into force. The Act ensures that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and any liabilities imposed by the TCO only apply to the Commonwealth.