EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0707731
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.
Donaghys Pty Ltd applied for a TCO in respect of certain mooring ropes on 24 May 2007.
Instrument
TCO No 0707731 was made on 19 October 2007. It declares that those certain mooring ropes 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 7.5%. 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 Tapex 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. 0707731 is taken to have come into force on 24 May 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, enacted by the Commonwealth Parliament, establishes a framework under which Tariff Concession Orders (TCOs) can be issued by the Chief Executive Officer of Customs. The intent behind this legislative framework is to facilitate the application of lower customs duty rates to certain goods, provided they meet specific criteria. The 2007 instrument, F2007L04476, illustrates the process by which Donaghys Pty Ltd successfully applied for a TCO for certain mooring ropes, resulting in a reduction of customs duty from 7.5% to 0%. This mechanism aims to support Australian businesses by reducing the cost of imported goods, thereby fostering a competitive market. The instrument was subject to public consultation, with an objection from Tapex Pty Ltd, but ultimately proceeded as the CEO found the application met the core criteria under the Act. The TCO came into effect on the date of application, 24 May 2007, and does not retroactively affect any pre-existing rights or impose new liabilities, ensuring that importers can benefit from the duty refund for imports made since the TCO's effective date.
Scope and Application
The Customs Act 1901, as amended, allows the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) which apply a lower rate of customs duty to certain goods, provided specific criteria are met. This legislation applies to any person or entity seeking a concession in the duty on imported goods, as long as the goods do not fall under the exclusions listed in section 269SJ of the Act. Such exclusions include goods that are of a type that are not produced in Australia or those that are substitutable by Australian-made goods. The application of this Act is national, operating under the Commonwealth jurisdiction. The process begins with an application by an interested party to the CEO, who then determines if the application meets the core criteria, specifically if no substitutable goods are produced in Australia at the time of application. If these conditions are satisfied, a TCO is issued, as demonstrated in the case of Donaghys Pty Ltd's application for certain mooring ropes, where a TCO resulted in a duty rate reduction from 7.5% to 0%. The TCO's commencement date aligns with the date of the application, ensuring no retroactive disadvantages to parties. The Act does not impose liabilities on any person other than the Commonwealth and allows for the publication of applications in the Gazette, inviting objections, as seen in the case where Tapex Pty Ltd objected to the TCO for the mooring ropes.
Key Provisions
The Tariff Concession Instrument No. 0707731 under the Customs Act 1901 provides a reduction in the rate of customs duty for certain mooring ropes (sections 269F, 269P(3)). The general rate of duty is reduced from 7.5% to 0% for these goods, provided the application for a Tariff Concession Order (TCO) meets the core criteria (section 269C). Specifically, this means that no goods produced in Australia that can substitute for the mooring ropes in question were being produced in the ordinary course of business at the time of the application (sections 269B, 269D, 269E, 269SJ). The instrument was made on 19 October 2007, and it is effective as of 24 May 2007, the date the application was lodged (subsection 269S(1)).
The Customs Act 1901 imposes several obligations on both the Chief Executive Officer of Customs (CEO) and applicants for a TCO. The CEO must assess whether an application meets the core criteria and ensure that the application is not for goods that are specifically excluded from TCO consideration (section 269SJ). If the application is valid, the CEO must publish a notice in the Gazette inviting objections, ensuring transparency and allowing stakeholders to voice their concerns (subsection 269K(1)). Once a TCO is issued, it benefits importers by allowing them to apply for a refund of duties paid on the goods since the effective date of the TCO (paragraph 126(1)(r) of the Regulations).
Breaching the provisions of the Customs Act 1901, including failing to comply with the requirements for a TCO, may result in civil or criminal penalties. The exact penalties are not specified in the Explanatory Statement, but generally, breaches of the Customs Act can lead to fines and potential imprisonment for serious offences. The severity of the penalty depends on the nature and extent of the breach.
The Tariff Concession Instrument No. 0707731 does not disadvantage any person, including importers, who were in possession of the goods before the effective date of the TCO (subsection 269S(1)). Importers of the affected goods can apply for a refund of the duty paid on the goods imported since 24 May 2007, the date the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). This provision ensures that importers are not unfairly burdened by the concession, while still benefiting from the reduced duty rate.