EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717697
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.
Stretchtex International Pty Ltd applied for a TCO in respect of certain warp knit fabric on 17 October 2007.
Instrument
TCO No 0717697 was made on 09 January 2008. It declares that those certain warp knit fabrics 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 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. 0717697 is taken to have come into force on 17 October 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 enacted by the Australian Parliament to regulate the import and export of goods within Australia. The Act provides a framework under which Tariff Concession Orders (TCOs) can be issued to offer relief on customs duties for certain goods. This was introduced to address the gap in providing duty relief to industries that lack local production capacity for specific goods. The Tariff Concession Instrument No. 0717697, enacted in 2008, exemplifies this mechanism by allowing the Chief Executive Officer of Customs to issue a TCO when no substitutable goods are produced in Australia. In this instance, the CEO made the order following an application by Stretchtex International Pty Ltd for certain warp knit fabrics, resulting in a reduction of the duty rate from 7.5% to free. This legislative instrument ensures that the rights of importers are positively impacted, as they can apply for a refund of duties paid on goods imported since the TCO's effective date.
Scope and Application
The Customs Act 1901, specifically through Part XVA, provides a framework for the Chief Executive Officer of Customs to issue Tariff Concession Orders (TCO) that apply lower rates of customs duty on certain goods. These orders apply to goods that meet the core criteria, which includes a situation where no substitutable goods are produced in Australia in the ordinary course of business on the day the TCO application is lodged. This legislation is relevant to any person or entity that seeks a TCO for goods not listed in section 269SJ of the Act, which excludes certain goods from eligibility for tariff concessions. The TCO applies nationally and is subject to publication and consultation processes as per section 269K of the Act. Any application for a TCO that meets the specified criteria must result in the issuance of a written order by the CEO. The application of TCO No. 0717697, which was made for certain warp knit fabrics, came into effect from the date of application, 17 October 2007, and exempts these fabrics from the general rate of duty, setting it at free. The TCO does not retroactively affect the rights or impose any liabilities on persons other than the Commonwealth, and it allows for duty refunds on goods imported since the date of the TCO's effective application.
Key Provisions
The Customs Act 1901 (the Act) under Part XVA, includes a provision for Tariff Concession Orders (TCOs) which are made by the Chief Executive Officer of Customs (CEO) (section 269F). The main operative sections (sections 269B, 269C, 269D, 269E, and 269P) outline the criteria for a TCO application and the conditions under which a TCO may be granted. 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 is further defined in sections 269B and 269E, which provide meanings for terms such as "goods produced in Australia", "ordinary course of business", and "substitutable goods". If the CEO is satisfied that the application meets the core criteria, they must make a written order (a TCO) declaring that the goods in question are subject to a prescribed rate of customs duty, as specified in the order (subsection 269P(3)).
The obligations imposed by the Act on the parties include the requirement for applicants to ensure their goods meet the core criteria for a TCO. The CEO has an obligation to review applications and make decisions based on whether the application meets the core criteria, as well as to publish notices in the Gazette to invite submissions from interested parties. The CEO is also required to ensure that TCOs do not impose any liabilities on any person other than the Commonwealth, and that they do not affect the rights of a person as at the date of registration (subsection 269S(1)).
The Act includes provisions for potential breaches and associated penalties. However, the explanatory statement does not specify any particular offences, penalties, or civil/criminal consequences for breach of the Act or the TCOs made under it. It is noted that the rights of importers will be beneficially affected, and that importers can apply for a refund of duty on goods imported since the day the TCO is taken to have come into force (paragraph 126(1)(r) of the Regulations). The statement also highlights that the TCO does not impose any liabilities on any person.