EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619471
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.
Exide Australia Pty Ltd applied for a TCO in respect of certain spunbonded fabric on 6 December 2006.
Instrument
TCO No 0619471 was made on 2 March 2007. It declares that those certain spunbonded fabric 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. 0619471 is taken to have come into force on 6 December 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. 0619471, enacted under the Customs Act 1901, addresses the need for tariff concessions on specific goods to support Australian businesses and economic growth. This instrument was introduced to provide relief from customs duties for goods that are not produced domestically and for which there are no substitutable goods in the Australian market. The policy objective is to ensure that Australian businesses are not unduly burdened by high customs duties on imported goods that are essential for their operations but not manufactured locally. The instrument was enacted by the Chief Executive Officer of Customs, who has the authority under section 269F of the Act to make such tariff concession orders.
This instrument was developed following an application by Exide Australia Pty Ltd for a tariff concession on certain spunbonded fabric. The CEO of Customs determined that no substitutable goods were produced in Australia and subsequently issued TCO No. 0619471, effective from 6 December 2006, reducing the customs duty on these goods from 5% to 0%. The process included a public consultation period, during which no objections were received. The instrument aims to enhance the competitiveness of Australian businesses by lowering the cost of essential imported goods, without imposing any liabilities on affected parties.
Scope and Application
The Customs Act 1901, as augmented by the Tariff Concession Instrument No. 0619471, provides a mechanism for tariff concessions on specific goods by which a lower rate of customs duty is applied. This instrument applies to any entity or individual seeking a tariff concession order (TCO) for goods not produced in Australia in the ordinary course of business. The instrument is administered by the Chief Executive Officer of Customs, who is mandated to assess applications against the core criteria specified in the Act, particularly ensuring that no substitutable goods are produced domestically. The instrument extends nationally across Australia, impacting import duties on the specified goods, in this case, certain spunbonded fabrics, reducing the duty rate from 5% to 0%. The commencement of the TCO is effective from the date of application, in this instance, 6 December 2006. Importantly, the TCO does not retroactively disadvantage any person or impose liabilities for actions prior to its registration, thereby ensuring that only future imports benefit from the reduced duty.
Key Provisions
The Customs Act 1901, under Part XVA, governs the creation and application of Tariff Concession Orders (TCOs), which provide for reduced customs duties on specific goods. According to section 269F, an applicant may apply to the Chief Executive Officer (CEO) of Customs for a TCO concerning particular goods. If the CEO determines that the application pertains to goods not listed in section 269SJ, which identifies those goods ineligible for a TCO, the CEO must assess whether the application meets the core criteria. Section 269C stipulates that an application meets these core criteria if, on the date of submission, no substitutable goods were produced in Australia in the ordinary course of business. Definitions of terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods" are provided in sections 269D, 269E, and 269F respectively.
Entities subject to the Act must ensure that their applications for TCOs are complete and meet the eligibility criteria outlined in section 269C. The CEO is required to publish a notice in the Gazette, under subsection 269K(1), inviting any interested parties to submit objections if they believe the TCO should not proceed. Additionally, under subsection 269S(1), a TCO is considered effective from the date the application was lodged. This means that the rights of importers are positively affected, and they can apply for duty refunds on goods imported since the effective date of the TCO, as stipulated in paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not disadvantage any person or impose liabilities for actions taken before the TCO's effective date.
Failing to comply with the provisions of the Customs Act 1901 regarding TCOs may result in civil or criminal consequences. The Act does not explicitly outline specific offences or penalties for breaches related to TCOs; however, general provisions under the Customs Act could apply, including fines and imprisonment for serious breaches. The maximum penalties could vary depending on the nature and severity of the breach, as determined by the courts. It is important for entities to adhere strictly to the legislative requirements to avoid potential legal ramifications.