EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0616832
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.
Kimberly-Clark Australia Pty Ltd applied for a TCO in respect of certain velcro hook fastening ribbon fabric on 06 September 2006.
Instrument
TCO No 0616832 was made on 15 December 2006. It declares that those certain velcro hook fastening ribbon fabrics 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. 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. 0616832 is taken to have come into force on 06 September 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 regulation of imports and exports, including the imposition of customs duties. To address specific economic and trade policy needs, Part XVA of the Act allows the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which provide for lower rates of customs duty on specified goods. This legislative instrument was introduced to address the problem of ensuring that Australian industries can remain competitive by providing tariff relief on certain goods where no substitutable goods are produced domestically. The policy objective is to facilitate the importation of goods that are essential for Australian industries but cannot be produced locally, thereby supporting economic efficiency and trade policy objectives. The TCO process involves an application to the CEO, a determination of whether the goods meet the core criteria, and a public consultation period, as outlined in the Act.
Scope and Application
The Customs Act 1901 applies to any individual or entity involved in the importation of goods into Australia, specifically within the scope of tariff concession orders. The Act allows for the reduction or exemption of customs duties on certain goods if a Tariff Concession Order (TCO) is granted by the Chief Executive Officer of Customs. This legislation is applicable nationally and encompasses various industries that rely on the importation of goods, provided the goods meet the criteria set forth in the Act, such as not having substitutable products manufactured domestically. The application process is initiated by a person, typically an importer or manufacturer, who submits a request for a TCO under section 269F. If the CEO determines that the application meets the core criteria, as outlined in sections 269C, 269D, 269E and 269SJ, a written TCO is issued. The instrument extends its effect from the date the application was lodged, as stipulated in subsection 269S(1). The rights of importers are positively affected, with provisions for duty refunds under regulation 126(1)(r) of the Customs Regulations 1993, while ensuring that no existing rights or liabilities of any person are adversely affected by the issuance of a TCO.
Key Provisions
The main operative sections of the Customs Act 1901 as amended by Tariff Concession Instrument No. 0616832 (paragraphs 269C, 269B, 269D, 269E, 269P, and 269SJ) establish the framework under which the Chief Executive Officer of Customs (the CEO) can make Tariff Concession Orders (TCOs). If the CEO determines that a TCO application meets the core criteria, they are required to make a written order (section 269P(3)) that specifies a lower rate of customs duty for certain goods. In this case, the TCO made on 15 December 2006 declares that certain velcro hook fastening ribbon fabrics are subject to a 5% duty rate, down from the general rate (section 269K(1)).
The Act imposes several obligations on the parties involved. Firstly, any person seeking a TCO must apply to the CEO (section 269F) and ensure that the application does not involve goods that cannot be subject to a TCO (section 269SJ). The CEO must assess whether the application meets the core criteria, specifically that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged (sections 269C, 269B, and 269E). Once the CEO is satisfied that the application meets these criteria, they must make the TCO (section 269P(3)). The CEO is also required to publish a notice in the Gazette inviting submissions from any person who believes the TCO should not be made (subsection 269K(1)).
Failing to comply with the provisions of the Customs Act 1901 or the terms of a TCO can result in various consequences. The Act does not specify detailed offences, penalties, or civil/criminal consequences for non-compliance with TCOs. However, the general legal framework surrounding the Act and associated regulations may impose penalties for breaches, including fines or other sanctions. For instance, if a person knowingly imports goods that should be subject to a higher customs duty rate due to non-compliance with a TCO, they might face penalties under the relevant customs legislation, which can include fines up to a substantial amount and potential criminal charges for wilful or negligent breaches.