EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705496
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 Company Pty Ltd applied for a TCO in respect of certain split non grain whole hide bovine leather on 16 April 2007.
Instrument
TCO No 0705496 was made on 06 July 2007. It declares that those certain split non grain whole hide bovine leathers 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. 0705496 is taken to have come into force on 16 April 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 Tariff Concession Instrument No. 0705496 was enacted under the Customs Act 1901 to provide a concession on the tariff for certain split non grain whole hide bovine leathers. This legislation was introduced to address the need for tariff concessions where no substitutable goods are produced in Australia, thereby allowing for lower customs duties to be applied to specified goods, in this case benefiting NSW Leather Company Pty Ltd by providing them with a tariff rate of free instead of the general 5% duty. The instrument was made by the Chief Executive Officer of Customs, following an application from NSW Leather Company Pty Ltd on 16 April 2007, and came into force on the same day. The instrument was published in the Gazette with an invitation for submissions, none of which were received. The policy objective is to facilitate the importation of goods where local production does not exist, thereby supporting Australian importers by potentially reducing the cost of imported goods.
Scope and Application
The Customs Act 1901, specifically Part XVA, governs the creation and implementation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. These orders are applicable to goods for which an application is made, provided that the goods are not specified in section 269SJ of the Act, which excludes certain types of goods from eligibility for tariff concessions. A TCO is applicable when no substitutable goods are produced in Australia at the time of application, as outlined in section 269C. The Act delineates the scope of TCOs to cover individuals and entities that apply for these concessions, focusing on specific goods and their potential substitutes produced within Australia. Geographically, the application of these orders is governed by federal laws, thus extending across the Commonwealth of Australia. However, the Act does not impose any liabilities on individuals or entities apart from the Commonwealth. The application of TCOs can be extended or refined through subordinate instruments, although the primary legislation sets the foundational criteria and limitations.
Key Provisions
The primary operative sections of the Customs Act 1901, as relevant to Tariff Concession Orders (TCOs), are sections 269C, 269F, 269P, and 269S. Section 269F allows a person to apply to the Chief Executive Officer of Customs (CEO) for a TCO in respect of goods, provided the goods are not specified in section 269SJ, which lists goods that cannot be subject to a TCO. If the CEO is satisfied that the application meets the core criteria, they must make a written order (section 269P(3)). Section 269C stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This means that if the CEO is satisfied that no equivalent Australian-produced goods exist that could replace the imported goods, they must grant the TCO. The CEO is also required to publish a notice in the Gazette inviting any interested parties to submit reasons why the TCO should not be made, although in this case, no such submissions were received.
The Customs Act imposes specific obligations and requirements on both the CEO and applicants for a TCO. The CEO must carefully assess each application to ensure it complies with the statutory criteria outlined in sections 269C and 269F. This involves verifying that the goods are not listed in section 269SJ and determining whether substitutable goods are produced in Australia. Once the CEO is satisfied that the application meets the core criteria, they must promptly make a written TCO. Additionally, the CEO is required to publish a notice in the Gazette as soon as practicable after accepting a TCO application as valid, providing an opportunity for public submissions. On the other hand, applicants must provide sufficient information to enable the CEO to make an informed decision about the application. They must ensure that their application details are accurate and complete, particularly in demonstrating that no substitutable goods are produced in Australia.
In terms of potential offences and penalties for breach, the Customs Act 1901 does not explicitly outline specific penalties for failing to comply with the provisions relating to TCOs. However, general provisions within the Act apply to breaches of its requirements. Under section 244 of the Act, any person who contravenes any provision of the Act, or any regulation or order made under the Act, is liable to a penalty of up to $22,200 for an individual and up to $111,000 for a body corporate, depending on the nature and seriousness of the offence. For repeated or serious breaches, the penalties can be significantly higher. Additionally, in cases of fraud or deliberate concealment, the penalties can escalate further. These penalties serve as a deterrent to ensure compliance with the Act's requirements, including those relating to TCOs.