EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0603913
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.
Kimberley Clark Australia Pty Ltd applied for a TCO in respect of certain fabric on 16 February 2006.
Instrument
TCO No 0603913 was made on 21 April 2006. It declares that those certain 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. 0603913 is taken to have come into force on 16 February 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 Australian Parliament, provides a framework for the administration of customs duties and related matters. Part XVA of this Act allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCOs) that reduce the duty on certain imported goods. This legislative mechanism was introduced to address the gap in providing tariff relief for specific goods that are not produced domestically or have no suitable substitute available in Australia. The policy objective is to encourage the import of goods that are not domestically manufactured, thereby potentially benefiting consumers and industries reliant on such imports. TCO No. 0603913, made on 21 April 2006, is an example of this mechanism in action, reducing the duty on certain fabrics to zero percent, effective from 16 February 2006, the date of application by Kimberley Clark Australia Pty Ltd. The process involved publishing a notice in the Gazette to invite objections, which in this case, none were received. This order directly benefits importers by potentially allowing them to claim refunds on duties paid prior to the effective date of the concession.
Scope and Application
The Tariff Concession Instrument No. 0603913 under the Customs Act 1901 applies to specific fabric goods as identified in the instrument. This Act is relevant to Kimberley Clark Australia Pty Ltd, which applied for the tariff concession, as well as to importers of the specified fabric goods. The instrument grants a concession on the customs duty for these goods, reducing it from the general rate of 5% to 0%. The scope of this Act is confined to the application and administration of tariff concessions for goods specified in the Instrument, and it operates within the framework established by the Customs Act 1901 and the Customs Tariff Act 1995. The geographic reach is national, as it pertains to customs duties across Australia. The Act does not apply to goods specified in section 269SJ of the Customs Act 1901, which lists goods that cannot be subject to a tariff concession order. The application of the Act can be extended or restricted through subordinate instruments as per the provisions of the Customs Act 1901.
Key Provisions
The primary sections of the Tariff Concession Instrument No. 0603913 (section 269C, 269B, 269D, 269E, 269P(3), and 269K(1)) establish the criteria for the Chief Executive Officer of Customs (CEO) to make a Tariff Concession Order (TCO). Under these sections, an application for a TCO must be considered if it pertains to goods not listed in section 269SJ, which outlines goods ineligible for a TCO. The CEO must determine whether the application meets the core criteria, specifically if no substitutable goods were produced in Australia on the application date. If the application meets the core criteria, the CEO must issue a TCO, specifying the applicable customs duty rate under Schedule 4 of the Customs Tariff Act 1995. For instance, in TCO No. 0603913, the CEO determined that certain fabrics eligible for a TCO were subject to a 0% duty rate, down from the general 5% rate.
The Customs Act 1901 imposes obligations on both the CEO and the applicant seeking a TCO. The CEO must ensure the application meets the eligibility criteria by verifying that no substitutable goods were produced in Australia and publishing a notice in the Gazette inviting submissions from interested parties. Kimberley Clark Australia Pty Ltd, the applicant in this case, must provide sufficient information to demonstrate the absence of substitutable goods in Australia. If the CEO is satisfied with the application, the CEO must make a written order declaring the goods to which the TCO applies. The CEO in this instance published a notice in the Gazette on the acceptance of the application for the TCO, inviting submissions but received none in response.
Breach of the provisions outlined in the Customs Act 1901 can result in significant penalties. While the explanatory statement does not explicitly state the penalties for non-compliance, it is understood that failure to adhere to the Act's requirements could result in legal action. Under the Customs Act 1901, penalties for offences can include fines up to $100,000 for individuals and $500,000 for corporations, as well as potential imprisonment for serious offences. The Act also allows for civil penalties and criminal prosecutions for breaches, with the severity of the penalty dependent on the nature and extent of the breach. In this context, failure by the CEO to correctly apply the criteria for issuing a TCO or the applicant to provide accurate information could lead to these consequences.