EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0702643
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.
Sanwa Pty Ltd applied for a TCO in respect of certain polyester fabric on 21 February 2007.
Instrument
TCO No 0702643 was made on 18 May 2007. It declares that those certain polyester 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. 0702643 is taken to have come into force on 21 February 2007.
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, as amended, introduced a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs to provide tariff concessions on certain goods. This legislation was enacted to address the need for streamlined customs duty processes for businesses that import goods not produced domestically. This helps in reducing the overall cost of imported goods, thereby promoting trade and economic growth. The instrument, Tariff Concession Instrument No. 0702643, was created by the CEO following an application by Sanwa Pty Ltd for a TCO on certain polyester fabrics. The CEO determined that no substitutable goods were produced in Australia, thus satisfying the core criteria for a TCO. The policy objective was to ensure that the rights of importers are beneficially affected without disadvantaging any other parties. The instrument came into force on the date the application was lodged, 21 February 2007, and no submissions were received in response to the published notice in the Gazette.
Scope and Application
The Tariff Concession Instrument No. 0702643 under the Customs Act 1901 applies specifically to goods that are subject to a Tariff Concession Order (TCO). The instrument is concerned with the concession of customs duty rates for specific goods, in this case, certain polyester fabrics, following an application by Sanwa Pty Ltd on 21 February 2007. The application was approved by the Chief Executive Officer of Customs, resulting in Instrument TCO No. 0702643, which came into effect on the same date the application was lodged. The instrument grants these specific polyester fabrics a lower rate of customs duty, reducing the general rate of 5% to free duty. The Act mandates that the CEO must ensure no substitutable goods are produced in Australia before approving the application, which was satisfied in this instance, leading to the tariff concession. The TCO applies nationally across Australia and affects the rights of importers of the specified goods, allowing them to apply for duty refunds on goods imported since the effective date of the TCO. The instrument does not disadvantage any person or impose liabilities on anyone in respect of actions taken before its registration.
Key Provisions
Section 269C (2) of the Customs Act 1901 sets out the core criteria for a Tariff Concession Order (TCO). It requires that on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This means that for a TCO to be approved, the goods in question must not have a domestic equivalent produced in Australia that can serve the same purpose or design use. The CEO of Customs must make a written order declaring that the goods are subject to a prescribed item of Schedule 4 to the Customs Tariff Act 1995, effectively granting a lower rate of customs duty or making it free.
The obligations imposed by the Customs Act 1901 on the parties involved include the requirement for applicants to ensure their applications meet the core criteria specified in section 269C, particularly the absence of substitutable goods produced in Australia. The CEO must rigorously assess applications against these criteria, including verifying the absence of any domestic production of substitutable goods. Upon determining that an application meets the criteria, the CEO is mandated to issue a written order as a TCO. The CEO must also publish a notice in the Gazette inviting submissions from any person who may have reasons why the TCO should not be made, as stipulated in section 269K(1).
Breaching the conditions set out by the Customs Act 1901 may lead to various consequences. If an applicant knowingly submits an application that does not meet the core criteria, such as misrepresenting the absence of substitutable goods, this could be viewed as an attempt to deceive the CEO, which might be subject to penalties under relevant Australian laws. The penalties for such breaches can be severe, including fines and potential imprisonment. However, the specific penalties are not outlined in the explanatory statement provided, and would typically be found in the broader legal framework governing customs and trade practices in Australia. The act of knowingly providing false information to the CEO could also lead to civil consequences, such as legal action for misrepresentation or fraud.