EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0717718
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.
Nylex applied for a TCO in respect of certain polyester and/or cotton and polyester and/or rayon and polyester fabrics on 17 October 2007.
Instrument
TCO No 0717718 was made on 16 January 2008. It declares that those certain polyester and/or cotton and polyester and/or rayon and polyester 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. 0717718 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 facilitate trade and manage customs duties among other functions. One of the mechanisms introduced to streamline trade is the Tariff Concession Order (TCO) under Part XVA of the Act, which allows for a lower rate of customs duty on certain goods. This was introduced to address the gap in providing relief to industries that rely on imported materials where no Australian-made substitutes exist. Tariff Concession Instrument No. 0717718, made on 16 January 2008, exemplifies this mechanism by granting a free rate of duty on specific polyester and cotton fabrics, following an application by Nylex on 17 October 2007. The policy objective here is to support the competitiveness of Australian industries by ensuring they are not burdened with high customs duties on goods for which no domestic alternatives are produced. The Chief Executive Officer of Customs was satisfied that the application met the core criteria, including the absence of substitutable goods produced in Australia, thereby allowing the concession to be applied from the date of the application.
Scope and Application
The Tariff Concession Instrument No. 0717718, made under the Customs Act 1901, applies to the goods specified in the instrument, which are certain polyester and/or cotton and polyester and/or rayon and polyester fabrics. This legislation is enacted at the Commonwealth level and is administered by the Chief Executive Officer of Customs. The instrument applies to entities or individuals importing these specific fabrics into Australia, providing them with a lower rate of customs duty as outlined in the Customs Tariff Act 1995. The Act stipulates that a Tariff Concession Order (TCO) can be made if the goods are not substitutable by any goods produced in Australia, thereby meeting the core criteria set out in section 269C of the Customs Act. The TCO in question was effective from the date the application was lodged, 17 October 2007, and it exempts these fabrics from the general rate of duty, which is 7.5%, by setting the duty rate to free. There were no objections received in response to the notice published in the Gazette, and the TCO does not impose any liabilities on any person or affect the rights of anyone as at the date of registration.
Key Provisions
The Tariff Concession Instrument No. 0717718, issued under section 269 of the Customs Act 1901 (the Act), pertains to the issuance of a Tariff Concession Order (TCO) for certain polyester and/or cotton and/or rayon and polyester fabrics. This instrument was made on 16 January 2008, and it declares that these specific fabrics are subject to a zero rate of customs duty instead of the usual 7.5%, as established in item 50 of Schedule 4 to the Customs Tariff Act 1995. The TCO applies to goods that Nylex applied for on 17 October 2007, and it became effective on the same day as the application was lodged, in accordance with subsection 269S(1) of the Act.
The Act imposes several obligations on the parties involved. The Chief Executive Officer of Customs (CEO) must determine whether an application for a TCO meets the core criteria, as outlined in sections 269C and 269F. According to section 269C, a TCO application meets the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. This determination requires the CEO to ensure that the goods specified in the application do not have any Australian-produced alternatives that could be used in the same way, as defined in sections 269D and 269E of the Act. Additionally, the CEO must publish a notice in the Gazette, inviting any person who believes the TCO should not be made to lodge a submission, as required by subsection 269K(1) of the Act.
Failure to comply with the provisions of the Customs Act 1901 may result in various consequences. While the Explanatory Statement does not specify offences or penalties directly associated with breaches of the TCO, the Act itself outlines potential penalties for breaches related to customs duties and regulations. For example, under section 276 of the Act, a person may be liable for a penalty of up to $22,200 or imprisonment for up to five years, or both, for an offence involving the importation of goods without the requisite duty being paid. These penalties underscore the importance of adhering to the terms and conditions of the TCO and the broader customs regulations.