EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0607541
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.
Super Cheap Auto Pty Ltd applied for a TCO in respect of certain car seat covers on 1 May 2006.
Instrument
TCO No 0607541 was made on 16 October 2006. It declares that those certain car seat covers 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 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. Four submissions objecting to the TCO application was received from Sheepskin Pty Ltd, Australian Skins & Souvenirs Pty Ltd,
Auto Fleece Seat Covers and Bambi Enterprises.
Further, subsection 269M(1) of the Act provides that if the CEO considers that, in relation to a particular TCO application, a person may have reason to oppose the making of the TCO to which the application relates, he or she may, by notice in writing, invite the person to lodge a written submission with the CEO. The CEO invited Sheepskin Pty Ltd, Australian Skins & Souvenirs Pty Ltd Auto Fleece Seat Covers , Bambi Enterprises, Caboolture Seat Cover Factory, Prestige Sheepskins, Tasman Sheepskin Tannery and Sheepskin Tailors to lodge a written submission.
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. 0607541 is taken to have come into force on 1 May 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, establishes a framework for the imposition of customs duties on imported goods. It includes provisions for Tariff Concession Orders (TCOs), which can reduce or eliminate customs duties on specific goods under certain conditions. Enacted to address the problem of ensuring fair and competitive market conditions for Australian businesses by allowing the importation of goods without prohibitive tariffs, TCOs aim to facilitate the availability of certain goods in the market that are not produced domestically. The Tariff Concession Instrument No. 0607541, made on 16 October 2006, is an example of such an order, allowing for the tariff-free importation of certain car seat covers following an application by Super Cheap Auto Pty Ltd, which demonstrated that no substitutable goods were produced in Australia at the time of application. This legislative framework ensures that the process for granting tariff concessions is transparent and allows for stakeholder submissions, as evidenced by the objections and submissions received in this instance.
Scope and Application
The Customs Act 1901, specifically Part XVA, establishes a framework for Tariff Concession Orders (TCOs), which can be applied for by individuals or entities to lower the customs duty on certain goods. The Chief Executive Officer of Customs (CEO) has the authority to approve these applications if certain criteria are met, such as the absence of substitutable goods being produced in Australia. This means that if the CEO determines that no similar goods are manufactured domestically, they can grant a TCO, which results in the application of a reduced duty rate or even duty-free treatment on the specified goods. The Act applies to any individual or entity that imports goods and seeks to benefit from reduced customs duties through a TCO. The geographic reach of the Act is national, as it operates under the Commonwealth of Australia. However, there are exclusions as outlined in section 269SJ of the Act, which lists goods that cannot be subject to a TCO. Additionally, the application and approval process for TCOs can be extended or clarified through subordinate instruments, allowing for more detailed regulation of the scheme.
Key Provisions
The main operative sections of the Customs Act 1901 as referenced in the explanatory statement are sections 269C, 269B, 269D, 269E, 269F, 269P, 269K, 269M, 269SJ, and 269S. Section 269F allows an application to be made to the Chief Executive Officer of Customs (the CEO) for a Tariff Concession Order (TCO). If the CEO is satisfied that the application meets the core criteria set out in section 269C, and that the goods are not specified in section 269SJ, the CEO must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995. Section 269K and section 269M require the CEO to publish a notice in the Gazette and to invite submissions from interested parties. Section 269S details the commencement date of the TCO and the effect of the TCO on the rights of persons.
The obligations and requirements imposed by the Act on the parties it governs include the need for a person to apply to the CEO for a TCO under section 269F, and for the CEO to consider the application against the core criteria in section 269C. The CEO must publish a notice in the Gazette under section 269K and invite submissions from interested parties under section 269M. The CEO must also ensure that the TCO does not disadvantage any person other than the Commonwealth and does not impose any liabilities on any person. Importers of the goods subject to the TCO are entitled to apply for a refund of duty under paragraph 126(1)(r) of the Regulations.
Any breach of the provisions of the Act may result in criminal or civil consequences. The maximum penalties for contraventions of the Customs Act 1901 are set out in section 256 of the Act. For individuals, the maximum penalty is imprisonment for 2 years or a fine of 12,000 penalty units or both. For bodies corporate, the maximum penalty is a fine of 105,000 penalty units or both. In addition, any person who is found to have contravened the Act may be liable for any loss or damage suffered by any other person as a result of the contravention.