EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0613955
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.
Nylex Industrial Products applied for a TCO in respect of certain tufted nylon vehicle carpets on 23 August 2006.
Instrument
TCO No 0613955 was made on 10 November 2006. It declares that those certain tufted nylon vehicle carpets 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. 0613955 is taken to have come into force on 23 August 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 Tariff Concession Instrument No. 0613955 was enacted under the Customs Act 1901 to address the need for a more flexible tariff regime that can accommodate the economic realities of industries which might otherwise struggle without specific tariff concessions. The Customs Act 1901 provides a framework for tariff concession orders (TCOs) that can be made by the Chief Executive Officer of Customs, allowing for reduced customs duty rates on certain goods, provided no substitutable goods are produced in Australia. This specific TCO was introduced following an application by Nylex Industrial Products for certain tufted nylon vehicle carpets, to which a lower rate of customs duty was applied as no suitable Australian-made alternatives exist. The policy objective of this legislative measure is to support industries that rely on imported materials, ensuring their competitiveness in the market without unduly burdening the Commonwealth's revenue.
Scope and Application
The Customs Act 1901, specifically under Part XVA, governs the process for Tariff Concession Orders (TCOs) which can be applied for by individuals or entities seeking a reduced rate of customs duty on specified goods. The Act applies to any person or entity that wishes to import goods eligible for a TCO. The application process requires that the goods in question are not specified in section 269SJ of the Act, which outlines goods that cannot be subject to a TCO, and that they meet the core criteria stipulated in section 269C. This involves ensuring that no substitutable goods are produced in Australia at the time of application. The TCOs have a Commonwealth reach, impacting the national tariff regime. Once a TCO is granted, it provides relief from the general rate of duty, as illustrated in TCO No. 0613955, where the duty on certain tufted nylon vehicle carpets was set to free, down from the general rate of 10%. The application and implementation of TCOs can be extended or restricted through subordinate instruments, though the primary legislation outlines the core criteria and process. The rights of importers are beneficially affected, allowing them to apply for duty refunds on goods imported since the effective date of the TCO.
Key Provisions
The main operative sections of the Tariff Concession Instrument No. 0613955 provide a framework for the Chief Executive Officer of Customs (CEO) to make Tariff Concession Orders (TCO) (s 269F). Under section 269C, a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. If the CEO is satisfied that the application meets these criteria, they must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (s 269P(3)). The instrument declares that certain tufted nylon vehicle carpets are subject to a 10% duty rate but, under the TCO, they are now duty-free. The CEO is required to publish a notice in the Gazette inviting submissions on the TCO application (s 269K(1)). This TCO is deemed to have come into force on the day the application was lodged (s 269S(1)).
The Act imposes several obligations on the CEO and other parties. The CEO must assess whether an application meets the core criteria, which includes determining whether substitutable goods were produced in Australia at the time of application (s 269C). If satisfied, the CEO must make a TCO and publish a notice in the Gazette to invite submissions from interested parties (s 269K(1)). The CEO must also ensure that the TCO does not disadvantage any person or impose liabilities in respect of actions taken before the TCO's effective date (s 269S). Importers, on the other hand, can benefit from the TCO by applying for a refund of duty on goods imported since the TCO's effective date (Reg 126(1)(r)).
There are no explicit offences or penalties stated in the document for failing to comply with the provisions of the TCO or the Act. However, failure to comply with the Act or the Regulations could potentially result in civil or criminal consequences under other sections of the Customs Act 1901. For example, contravening the Act could lead to fines and imprisonment under section 244, which addresses false statements or representations in connection with customs or excise matters. While specific maximum penalties for breaches related to TCOs are not provided in this document, general penalties under the Customs Act can include fines of up to $22,200 for individuals and $111,000 for bodies corporate, along with potential imprisonment terms.