EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0515318
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.
Sanwa Pty Ltd applied for a TCO in respect of certain Polyester Fabric on 2 November 2005.
Instrument
TCO No 0515318 was made on 16 January 2006. It declares that those certain Polyester 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. 0515318 is taken to have come into force on 2 November 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 to regulate the import and export of goods in Australia, establishing various frameworks for the imposition and concession of customs duties. The Act, amended over the years, includes provisions for Tariff Concession Orders (TCOs) under Part XVA, which allow the Chief Executive Officer of Customs to apply lower rates of customs duty on certain goods. This scheme was introduced to address the gap in providing relief to industries that could not compete domestically with imported goods by offering them tariff concessions. Enacted by the Australian Parliament, the primary policy objective of this legislation is to support local industries by reducing the customs duty on specific goods, thus making imported goods more competitive with locally produced ones where applicable. The process for granting a TCO involves an application by an interested party, subject to stringent criteria that ensure the concession does not undermine local production.
Scope and Application
The Tariff Concession Instrument No. 0515318 under the Customs Act 1901 applies to any person who applies for a Tariff Concession Order (TCO) for specific goods, which in this case are certain Polyester Fabrics. This Act enables the Chief Executive Officer of Customs (CEO) to grant lower customs duty rates for goods that meet the core criteria outlined in the Act. For Sanwa Pty Ltd, the CEO made a TCO effective from the date of the application, which was 2 November 2005, after determining that no substitutable goods were produced in Australia. The TCO specifies that these Polyester Fabrics are subject to a 0% duty rate, as opposed to the general rate of 5%. The application of the Act is limited to Commonwealth jurisdiction and does not extend to state or territory laws unless otherwise specified. The Act does not disadvantage any person other than the Commonwealth and does not impose liabilities on any person in relation to actions taken before the TCO’s registration. The scope of the Act may be further refined through subordinate instruments, which can extend or restrict its application as necessary.
Key Provisions
The Tariff Concession Instrument No. 0515318, made under section 269F of the Customs Act 1901 (the Act), establishes a lower rate of customs duty for certain Polyester Fabrics. This reduction, from a general rate of 5% to 0%, is effective from the date the application for the tariff concession order (TCO) was lodged, which in this case was 2 November 2005. The instrument declares that these Polyester Fabrics are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995 (the Tariff), and this declaration is made on the basis that no substitutable goods were produced in Australia at the time of the application (sections 269C and 269P(3)). The Chief Executive Officer of Customs (the CEO) must decide whether an application for a TCO meets the core criteria, which require that no substitutable goods were produced in Australia in the ordinary course of business on the date of the application (section 269C).
The obligations imposed by the Customs Act 1901 on parties and entities governed by it include the requirement for a person to apply to the CEO for a TCO in respect of goods, provided the goods are not specified in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. The CEO is obligated to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, inviting any person who believes there are reasons why the TCO should not be made to lodge a submission. In this case, the CEO did not receive any submissions in response to this invitation (subsection 269K(1)). The CEO must also ensure that the application meets the core criteria, which necessitate that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (section 269C).
Failure to comply with the provisions of the Customs Act 1901 can result in legal consequences. Under the Act, there are specific offences and penalties for breaches. However, the explanatory statement does not provide explicit details on the maximum penalties for non-compliance. The TCO itself does not impose any liabilities on any person and 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 in respect of anything done or omitted to be done before the date of registration. Importers, however, will be able to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.