EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0619979
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.
Footwear Industries Pty Ltd applied for a TCO in respect of certain cellular urethane foam on 19 December 2006.
Instrument
TCO No 0619979 was made on 16 March 2007. It declares that those certain cellular urethane foams 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. 0619979 is taken to have come into force on 19 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. 0619979, made under the Customs Act 1901, was introduced to provide tariff concessions on certain cellular urethane foams, effectively reducing the customs duty from 5% to free. This legislative instrument was enacted in 2007 and addresses the gap in duty concessions for goods not produced domestically and for which no substitutable Australian goods exist. The Tariff Concession Orders (TCOs) scheme allows the Chief Executive Officer of Customs to grant these concessions if certain criteria are met, primarily ensuring that the goods in question are not already being produced in Australia. Footwear Industries Pty Ltd applied for this concession on 19 December 2006, and the instrument was registered on 16 March 2007, with an effective date of 19 December 2006, ensuring that importers could benefit from duty-free treatment for these goods. The process followed the legislative requirements, including publishing a notice in the Gazette to allow for objections, which in this case, did not result in any submissions. The policy objective is to facilitate trade by reducing the cost of importing certain goods, thereby supporting industry and potentially lowering consumer prices.
Scope and Application
The Tariff Concession Instrument No. 0619979 under the Customs Act 1901 applies specifically to certain cellular urethane foams, which are subject to a tariff concession order (TCO) made by the Chief Executive Officer of Customs. This Act pertains to the application process for tariff concessions, which involves an application being submitted and assessed based on whether substitutable goods are produced in Australia. If the core criteria are met, a TCO is issued, resulting in a reduction of the duty rate for the specified goods from 5% to free. The geographic and jurisdictional reach of this Act is national, as it operates under the Customs Act 1901, which is a Commonwealth Act. The TCO is effective as of the date the application was lodged, and it does not retroactively affect the rights or impose liabilities on any person other than the Commonwealth. Additionally, the instrument extends its application through subordinate instruments, such as the Customs Tariff Act 1995, which specifies the prescribed item of the schedule applicable to the goods in question.
Key Provisions
The Customs Act 1901 provides a framework under which Tariff Concession Orders (TCO) can be applied for and granted, allowing for reduced rates of customs duty on certain goods. Section 269F of the Act allows any person to apply to the Chief Executive Officer (CEO) of Customs for a TCO with respect to goods. For the CEO to consider a TCO application, it must not be for goods specified in section 269SJ, which are goods that cannot be subject to a TCO (s 269F). If the CEO is satisfied that the application is valid and for goods not listed in 269SJ, the CEO must determine whether the application meets the core criteria as outlined in section 269C.
A TCO application meets the core criteria if, on the date the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business (s 269C). Definitions for these terms are provided in sections 269D, 269E, and 269F, respectively. If the CEO is satisfied that the application meets the core criteria, they must issue a written order declaring that the goods specified in the application are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (s 269P(3)). The CEO must also publish a notice in the Gazette inviting submissions from any person who believes there are reasons why the TCO should not be made (s 269K(1)).
The obligations imposed on the CEO by the Act include reviewing the TCO application, ensuring it meets the criteria specified in sections 269F, 269C, and 269SJ, and deciding whether to make the TCO. If the CEO decides to make the TCO, they must publish the notice in the Gazette and issue the written order. The CEO is also required to consider any submissions received in response to the notice. The rights of importers will be beneficially affected, as they will be able to apply for a refund of duty on goods imported since the day the TCO is taken to have come into force under paragraph 126(1)(r) of the Regulations.
Failure to comply with the requirements of the Customs Act 1901 or the imposition of a TCO can result in offences and penalties. However, the explanatory statement does not specify any particular offences, penalties, or consequences for breach. The maximum penalties for offences under the Customs Act 1901 can include fines of up to $22,000 for individuals and $110,000 for bodies corporate, as well as imprisonment for up to five years, as per section 27 of the Crimes Act 1914. The specific penalties for breaches related to TCOs may be outlined in other sections of the Customs Act 1901 or in the Customs Regulations 1994.