EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0711401
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.
3M Australia Pty Ltd applied for a TCO in respect of certain nonwoven fastening tapes on 16 July 2007.
Instrument
TCO No 0711401 was made on 02 October 2007. It declares that those certain nonwoven fastening tapes 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. 0711401 is taken to have come into force on 16 July 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 Parliament of Australia, addresses the need for tariff concession mechanisms to facilitate the importation of specific goods under favourable duty conditions. This Act provides a framework for the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs), which allow for reduced customs duty rates on certain imported goods. The introduction of this mechanism is intended to support industries by lowering the cost of imported goods that do not have locally produced substitutes, thereby enhancing the competitiveness of Australian businesses in the global market. The explanatory statement outlines the process for making a TCO, including the criteria for applications and the conditions under which the CEO can issue such an order, ensuring that the interests of importers are protected and that the rights of other stakeholders are not adversely affected.
Scope and Application
The Tariff Concession Instrument No. 0711401, issued under the Customs Act 1901, applies to the concession of customs duty for certain nonwoven fastening tapes, with the intent of facilitating the import of these goods into Australia. This instrument specifically pertains to applications made by entities such as 3M Australia Pty Ltd, which sought a tariff concession order (TCO) to benefit from a lower rate of customs duty. The application of this legislation is geographically limited to Australia, as it concerns the administration of customs duties within the country’s borders. The instrument is effective from the date the application was lodged, 16 July 2007, and provides that the TCO does not disadvantage or impose liabilities on any person except the Commonwealth. Notably, this TCO exempts the specified goods from the general rate of duty, which is 5%, by imposing a duty rate of free. The CEO of Customs ensures that no substitutable goods were produced in Australia when making the decision to grant the TCO, as stipulated by sections 269C and 269D of the Act.
Key Provisions
The primary operative sections of Tariff Concession Instrument No. 0711401 are found in sections 269C, 269P, and 269S of the Customs Act 1901. Section 269C outlines the core criteria that must be met for a Tariff Concession Order (TCO) application to be valid, primarily ensuring that no substitutable goods are produced in Australia at the time of application. Section 269P(3) mandates that if these criteria are satisfied, the Chief Executive Officer of Customs (CEO) must issue a written TCO. Finally, section 269S specifies the commencement date of the TCO, which is the day the application was lodged.
The Act imposes several obligations on parties involved in TCO applications. The applicant must ensure their application meets the core criteria set out in section 269C, which involves demonstrating that no substitutable goods are produced in Australia at the time of application. The CEO has the responsibility of reviewing the application to verify it meets these criteria and, if satisfied, issuing a TCO as required by section 269P(3). Additionally, under section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties, although no submissions were received in this instance.
Failure to comply with the requirements of the Customs Act 1901 may result in civil or criminal consequences. Specifically, section 126 of the Customs Regulations 1993 provides for potential penalties, although the precise penalties are not detailed within this explanatory statement. However, it is clear that the Act and its regulations are designed to ensure compliance through enforcement mechanisms, including the possibility of penalties for non-compliance. Importers, however, benefit from the TCO as they can apply for a refund of duty on goods imported since the TCO came into force, as per paragraph 126(1)(r) of the Regulations.
The TCO does not impose any liabilities on any person other than the Commonwealth and does not affect the rights of any person as at the date of registration to the disadvantage of that person. It ensures that while the rights of importers are beneficially affected, there are no retroactive liabilities imposed on any party, which aligns with the protective intent of the Act.