EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0617923
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.
NSW Leather Co Pty Ltd applied for a TCO in respect of certain bovine leather on 24 October 2006.
Instrument
TCO No 0617923 was made on 12 January 2007. It declares that those certain bovine leather 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. 0617923 is taken to have come into force on 24 October 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 and excise duties in Australia. The Act allows for the creation of Tariff Concession Orders (TCOs) to provide tariff concessions on certain goods, aiming to address specific economic or policy needs. This legislation was introduced to streamline the process for applying for tariff concessions, ensuring that the Chief Executive Officer of Customs can efficiently assess and approve applications that meet the stipulated criteria. The policy objective behind this mechanism is to facilitate trade by reducing the duty on specified goods, thereby enhancing competitiveness and potentially encouraging domestic production where applicable. Instrument No. 0617923, issued under the authority of the Customs Act, is an example of such a concession, granting a tariff reduction on certain bovine leather, reflecting the Act’s intent to support specific sectors by lowering import duties.
Scope and Application
The Customs Act 1901, through Part XVA, facilitates the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, aimed at providing lower rates of customs duty on specified goods. This mechanism is available to any person who applies for such an order in respect of goods, provided that these goods are not specified in section 269SJ of the Act, which lists items ineligible for tariff concessions. The application process requires that, on the date of lodging, no substitutable goods are produced in Australia in the ordinary course of business, as defined by sections 269D and 269E of the Act. If these conditions are met, the CEO must issue a TCO, as demonstrated in the case of NSW Leather Co Pty Ltd's application for bovine leather, which resulted in TCO No. 0617923, reducing the duty rate from 5% to 0%. This legislative provision does not retroactively affect the rights of any person, including imposing new liabilities, but does entitle importers to a refund of duties paid on eligible goods since the effective date of the TCO, as outlined in paragraph 126(1)(r) of the Regulations.
Key Provisions
The key provisions of Tariff Concession Instrument No. 0617923 (section 269P(3)) require that a Tariff Concession Order (TCO) is made when the Chief Executive Officer (CEO) of Customs is satisfied that the application for a TCO meets the core criteria, which include the absence of substitutable goods produced in Australia at the time of application (sections 269C and 269D). This TCO applies to certain bovine leather, reducing the duty from 5% to 0% (Schedule 4, item 50 of the Customs Tariff Act 1995). The TCO comes into force on the day the application was lodged (subsection 269S(1)) and does not affect any rights or impose any liabilities on anyone other than the Commonwealth in respect of anything done before the date of registration (subsection 269S(2)). Importers can apply for a refund of duty on goods imported since the TCO came into force (paragraph 126(1)(r) of the Regulations).
The obligations imposed by the Act on parties include the requirement for the CEO to publish a notice in the Gazette inviting submissions if a TCO application is accepted as valid (subsection 269K(1)). In this case, no submissions were received in response to the invitation. The CEO must ensure that applications for TCOs meet the core criteria, which include verifying that no substitutable goods were produced in Australia at the time of application (sections 269C and 269D). The CEO must also make a written TCO if the application meets the core criteria (section 269P(3)).
For breaches of the conditions set out in a TCO, the CEO can impose penalties under the Customs Act 1901. Such penalties may include fines, imprisonment, or both, depending on the severity of the breach. The specific penalties are determined by the relevant provisions of the Customs Act 1901 and the Customs Tariff Act 1995. If a person is found to have contravened the terms of a TCO, they may face criminal charges, which could result in fines or imprisonment, or both, as prescribed by the relevant legislation.