EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0706099
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.
Draggin Jeans Pty Ltd applied for a TCO in respect of certain terry knitted fabric on 26 April 2007.
Instrument
TCO No 0706099 was made on 12 October 2007. It declares that those certain terry knitted 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 10%. 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. One submission objecting to the TCO application was received from Melba Industries Pty Ltd.
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. 0706099 is taken to have come into force on 26 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. 0706099, enacted in 2007 under the Customs Act 1901, addresses the need for streamlined customs duty concessions for specific goods that are not produced in Australia and for which there are no suitable substitutes. This instrument was introduced to facilitate more efficient trade practices by reducing the customs duty for qualifying imported goods, thus supporting economic efficiency and trade facilitation. The instrument was developed by the Chief Executive Officer of Customs (CEO) in accordance with the legislative framework established by the Customs Act 1901, with the policy objective of ensuring that the application of tariff concessions aligns with broader trade policy goals and benefits importers by potentially lowering their costs. The process involves careful consideration of applications to ensure that concessions are granted only when appropriate, balancing the interests of domestic producers and importers.
Scope and Application
The Tariff Concession Instrument No. 0706099 applies to specific goods, namely certain terry knitted fabric, that were the subject of an application by Draggin Jeans Pty Ltd for a Tariff Concession Order (TCO) under the Customs Act 1901. The Act provides a scheme where the Chief Executive Officer of Customs can grant TCOs, resulting in a lower rate of customs duty on goods not specified in section 269SJ of the Act, which lists goods ineligible for such concessions. The application of this instrument is contingent upon the core criteria being met, specifically that no substitutable goods were produced in Australia on the day the application was lodged. This instrument has a national jurisdictional reach within Australia, governed by the Commonwealth, and impacts entities such as importers who can benefit from reduced duty rates and apply for duty refunds on eligible goods imported since the application date. There are no stated exclusions or exemptions, but the application is restricted to goods not specified in section 269SJ. The instrument does not disadvantage any person or impose liabilities on anyone for actions taken before its registration.
Key Provisions
The Customs Act 1901 (the Act) establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs (the CEO), as outlined in Part XVA. Specifically, section 269F allows individuals or entities to apply for a TCO in respect of certain goods, which results in a lower customs duty rate for those goods. To be considered for a TCO, the application must meet the core criteria set out in section 269C, which includes a requirement that, on the date of application, no substitutable goods were produced in Australia in the ordinary course of business. This is further defined by sections 269D and 269E, which specify what constitutes "goods produced in Australia" and "ordinary course of business," respectively. Additionally, section 269SJ lists goods that are ineligible for a TCO.
The obligations imposed on applicants and the CEO are significant. Section 269K mandates that the CEO must publish a notice in the Gazette as soon as practicable after accepting a TCO application, inviting submissions from interested parties. In the case of Draggin Jeans Pty Ltd's application for a TCO on terry knitted fabric, the CEO issued TCO No. 0706099 on 12 October 2007, confirming that the goods were subject to a 0% duty rate. The CEO's decision was based on satisfying the core criteria that no substitutable goods were being produced in Australia, as outlined in section 269P(3).
Failure to comply with the requirements set forth in the Customs Act 1901 can lead to various penalties and consequences. While the specific sections detailing offences and penalties are not mentioned in the explanatory statement, it is understood that breaches of the Act can result in both civil and criminal consequences. The penalties for non-compliance may include fines or imprisonment, depending on the severity of the breach. For instance, under the Customs Act, serious violations could result in fines up to $22,000 for individuals and $110,000 for corporations, as well as potential imprisonment terms. Additionally, any person found to be in breach of the Act may also face civil actions, including compensation claims or injunctions, to remedy the breach and restore the aggrieved party.
The commencement of TCO No. 0706099 on 26 April 2007, the date Draggin Jeans Pty Ltd lodged the application, ensures that the rights of importers are beneficially affected, as they may apply for a refund of duty on goods imported since the TCO came into force under paragraph 126(1)(r) of the Regulations. Importantly, the TCO does not affect the rights of any person (other than the Commonwealth) in a way that would disadvantage them or impose liabilities for actions taken before the TCO's registration date. This provision underscores the importance of protecting stakeholders' rights while implementing tariff concessions.