EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618073
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.
3M Australia Pty Ltd applied for a TCO in respect of certain knitted loop fabrics on 01 November 2006.
Instrument
TCO No 0618073 was made on 12 January 2007. It declares that those certain knitted loop 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. 0618073 is taken to have come into force on 01 November 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, establishes a framework for the regulation of customs and excise, including the ability to provide tariff concessions on certain goods. The Act was introduced to address the need for a flexible mechanism to reduce customs duties on specific goods, thereby encouraging trade and investment. In this context, the Tariff Concession Instrument No. 0618073 was developed to provide a tariff concession to 3M Australia Pty Ltd for certain knitted loop fabrics, effective from 1 November 2006. This instrument, made by the Chief Executive Officer of Customs, was introduced after the CEO was satisfied that no substitutable goods were produced in Australia, aligning with the core criteria outlined in the Act. The policy objective of this measure was to facilitate smoother trade by reducing the duty on these specific goods, thereby benefiting importers and potentially stimulating economic activity.
Scope and Application
The Tariff Concession Instrument No. 0618073 under the Customs Act 1901 applies to any person seeking a tariff concession order for goods that are imported into Australia and subject to customs duty. The Act allows the Chief Executive Officer of Customs to make such orders, provided that the goods in question are not specified in section 269SJ of the Act and meet the core criteria, particularly that no substitutable goods are produced in Australia in the ordinary course of business. The geographic reach of this Act is national, as it pertains to customs duties applied across Australia. The application of this specific TCO, effective from 01 November 2006, reduces the duty on certain knitted loop fabrics from a general rate of 5% to free. The TCO does not disadvantage or impose liabilities on any person other than the Commonwealth and beneficially affects the rights of importers who can apply for a refund of duty paid on goods imported since the effective date of the TCO. The Act may extend its application through subordinate instruments, such as regulations, which may further define terms and procedures for the implementation and enforcement of tariff concessions.
Key Provisions
The Tariff Concession Instrument No. 0618073, under the Customs Act 1901, is a significant legislative measure that applies to certain knitted loop fabrics, reducing their customs duty rate to zero. Section 269F of the Act allows for an application to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) concerning specific goods. If the application meets the core criteria outlined in section 269C, which includes the condition that no substitutable goods were produced in Australia in the ordinary course of business on the day the application was lodged, the CEO must grant the TCO. Section 269P(3) mandates that a written order must be issued, specifying that the goods in question are subject to a particular tariff item, as outlined in Schedule 4 to the Customs Tariff Act 1995.
The obligations imposed by the Act on the parties involved, particularly the CEO of Customs, are clear and specific. The CEO must ensure that the TCO application adheres to the criteria set forth in section 269C. This includes verifying that no substitutable goods were produced in Australia on the date of the application. Additionally, the CEO is required to publish a notice in the Gazette, as stipulated in subsection 269K(1) of the Act, inviting any interested parties to submit their views on the application. The CEO did not receive any submissions in response to the notice published for this particular TCO.
The Act also outlines the potential consequences for non-compliance with its provisions. While the explanatory statement does not detail specific offences or penalties under this TCO, it is important to note that breaches of the Customs Act 1901 can result in both civil and criminal penalties. The severity of these penalties can vary, but they can include substantial fines and, in some cases, imprisonment. The specific penalties would be determined by the nature and severity of the breach, as well as any applicable provisions within the broader Customs Act framework. The TCO itself does not impose any liabilities on any person, ensuring that the rights of importers are protected and beneficially affected.