EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0606985
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.
Hunter Douglas Ltd applied for a TCO in respect of certain acrylic fabric on 18 April 2006.
Instrument
TCO No 0606985 was made on 7 July 2006. It declares that those certain acrylic 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 free.
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. 0606985 is taken to have come into force on 18 April 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 Commonwealth Parliament, governs the importation and exportation of goods in Australia. Part XVA of the Act provides for the making of Tariff Concession Orders (TCOs), which allow for a lower rate of customs duty on specified goods. The primary problem addressed by this legislation is the need to provide tariff concessions for certain goods where no substitutable goods are produced in Australia, thereby potentially reducing costs for businesses and consumers. Tariff Concession Instrument No. 0606985, made under the authority of the Customs Act 1901, was introduced to provide tariff concessions for certain acrylic fabric, reducing the general rate of duty from 10% to free. The policy objective of this instrument was to ensure that the tariff concessions would benefit importers without imposing any liabilities or disadvantaging any person. The instrument came into effect on the date the application was lodged, 18 April 2006, and no submissions were received in opposition to the concession.
Scope and Application
The Tariff Concession Instrument No. 0606985 under the Customs Act 1901 applies to the specific case of certain acrylic fabric, as applied for by Hunter Douglas Ltd on 18 April 2006. This legislation targets the application for and granting of a Tariff Concession Order (TCO), which provides for a reduced rate of customs duty on goods that meet certain criteria. Specifically, the Act applies to the Chief Executive Officer of Customs who is tasked with deciding whether to grant a TCO based on the application, ensuring that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this Act is national, affecting entities and individuals involved in the import and export of goods subject to the Customs Act. However, it does not extend to goods specified in section 269SJ of the Act, which are ineligible for a TCO. The application of this legislation is further extended or restricted through subordinate instruments, which may detail specific goods or industries affected by the concessions. The Act ensures that the rights of parties are not adversely affected by the issuance of a TCO, maintaining the status quo for those not directly involved in the concession.
Key Provisions
The primary sections of this legislation (F2006L02360) that are relevant include sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria set out in section 269C, they must make a written order that declares the goods subject to the application as being subject to a prescribed tariff rate specified in Schedule 4 to the Customs Tariff Act 1995. Section 269P(3) details the process whereby, if the CEO is satisfied that the application meets the core criteria, they must make the TCO. Finally, section 269S outlines the commencement of the TCO, which is effective from the date the application was lodged.
The obligations imposed by this legislation are primarily on the CEO of Customs, who must evaluate applications for TCOs to ensure they meet the core criteria, specifically that no substitutable goods are produced in Australia on the date the application was lodged. Once an application is deemed to meet the criteria, the CEO must publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not proceed, as mandated by subsection 269K(1). The CEO is also required to make the TCO if they are satisfied the application meets the core criteria.
In terms of consequences for breaches, the explanatory statement does not explicitly outline offences, penalties, or civil/criminal consequences for failure to comply with the requirements of this legislation. However, the seriousness of the duty relief provided under a TCO could imply significant financial implications for non-compliance. For example, if a TCO was incorrectly issued and goods were incorrectly classified, this could result in financial losses to the Commonwealth through underpaid duties, and potential legal repercussions for those involved in the incorrect classification or misuse of the TCO.