EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0705505
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 unsplit full grain whole hide bovine leather on 16 April 2007.
Instrument
TCO No 0705505 was made on 06 July 2007. It declares that those certain unsplit full 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. 0705505 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 Customs Act 1901 was amended to introduce a scheme under which Tariff Concession Orders (TCOs) could be made by the Chief Executive Officer of Customs (CEO), providing for a lower rate of customs duty on specified goods. This legislative change was enacted to address the gap in the customs duty scheme by allowing for tariff concessions on certain goods, provided they meet specific criteria such as not being substitutable by goods produced in Australia. The Customs Act 1901, administered by the Parliament of Australia, aims to facilitate trade by providing tariff relief where appropriate. Instrument TCO No. 0705505, made on 6 July 2007, applies this scheme to certain unsplit full grain whole hide bovine leather, reducing the general duty rate from 5% to free, effective from 16 April 2007, the date the application was lodged. The process involved publishing a notice in the Gazette and receiving no submissions against the concession, ensuring that the rights of importers are positively impacted without imposing new liabilities.
Scope and Application
The Customs Act 1901, as modified by Tariff Concession Instrument No. 0705505, pertains to the application of tariff concession orders (TCOs) which can be sought by any person or entity in relation to specific goods. The instrument applies to the category of unsplit full grain whole hide bovine leather, which is subject to a concession where the applicable duty rate is reduced from 5% to free. This instrument applies nationally across Australia and is subject to the conditions specified within the Customs Act 1901 and the Customs Tariff Act 1995. The application of the TCO is contingent on the absence of substitutable goods being produced in Australia at the time of the application, as stipulated by section 269C of the Act. The geographic reach of the Act is Commonwealth-wide, and it does not apply to goods specified under section 269SJ of the Act, which outlines those goods that cannot be subject to a TCO. Any subordinate instruments or regulations that may extend or restrict the application of the Act are to be found within the Customs Act 1901 and the Customs Tariff Act 1995.
Key Provisions
The Tariff Concession Instrument No. 0705505, made under the Customs Act 1901, provides a concession for certain unsplit full grain whole hide bovine leather. Section 269F (1) allows an application for a Tariff Concession Order (TCO) to be made to the Chief Executive Officer of Customs (CEO). If the CEO determines that the application meets the core criteria as outlined in section 269C, a TCO is issued. The TCO declares that the specified goods are subject to a reduced rate of customs duty as per the prescribed item in Schedule 4 of the Customs Tariff Act 1995. For the particular case of the unsplit full grain whole hide bovine leather, the TCO declares that these goods are subject to a duty rate of free, rather than the general rate of 5%.
The obligations imposed by the Act on parties include ensuring that applications for TCOs are made in accordance with section 269F, and the CEO must assess these applications against the core criteria in section 269C. The CEO must also publish a notice in the Gazette under subsection 269K(1) inviting submissions from any interested parties. The CEO is required to consider any submissions received and make a decision on the TCO application. The commencement of the TCO is effective from the date the application was lodged, as stipulated in subsection 269S(1).
There are no specific offences, penalties, or civil/criminal consequences outlined in the Act for breach of the TCO provisions. However, any failure to comply with the terms of the TCO could potentially lead to disputes regarding the application of customs duties. The Act ensures that the TCO does not affect the rights of any person as at the date of registration to disadvantage them or impose liabilities in respect of actions taken prior to the registration of the TCO. Importers of the specified goods can apply for a refund of duty under paragraph 126(1)(r) of the Regulations, which could provide a remedy for any overpayment of duty prior to the TCO's effective date.