EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721787
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.
Freudenberg Pty Ltd applied for a TCO in respect of certain interlining fabric on 18 December 2007.
Instrument
TCO No 0721787 was made on 07 March 2008. It declares that those certain interlining 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 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. 0721787 is taken to have come into force on 18 December 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 Commonwealth Parliament to establish a framework for the regulation of customs and excise duties, amongst other things. The Act was amended in 2001 to introduce Tariff Concession Orders (TCOs) as a mechanism to provide tariff concessions for certain imported goods. The explanatory statement for Tariff Concession Instrument No. 0721787, made under the Customs Act 1901, indicates that the instrument was introduced to address the specific needs of Freudenberg Pty Ltd in relation to the importation of certain interlining fabric. The policy objective of the TCO scheme is to provide relief from customs duties for imported goods where no substitutable goods are produced in Australia. In this case, the Chief Executive Officer of Customs determined that no substitutable goods were produced in Australia, and thus granted a tariff concession, resulting in the goods being subject to a rate of duty of free, as opposed to the general rate of 5%. The instrument came into effect on the date the application was lodged, being 18 December 2007, and does not disadvantage any person or impose any new liabilities.
Scope and Application
The Tariff Concession Instrument No. 0721787, made under the Customs Act 1901, applies specifically to certain interlining fabrics, as requested by Freudenberg Pty Ltd. This legislation targets the application of a lower rate of customs duty on these goods, granted through a Tariff Concession Order (TCO) issued by the Chief Executive Officer of Customs. The Act applies to the entities or individuals seeking tariff concessions for specific goods, ensuring that these entities meet the criteria set out under section 269C, which requires that no substitutable goods are produced in Australia at the time of the application. The TCO is effective nationally and operates within the existing framework of the Customs Act 1901 and the Customs Tariff Act 1995. It does not impose any additional liabilities or disadvantages to any person other than the Commonwealth and is not applicable to goods specified in section 269SJ of the Act. The instrument extends its application through subordinate instruments, allowing for the detailed specification of the goods and the associated tariff reductions.
Key Provisions
The main operative sections of Tariff Concession Instrument No. 0721787, under the Customs Act 1901, concern the application and approval process for Tariff Concession Orders (TCOs). Section 269F allows for an application to be made to the Chief Executive Officer (CEO) of Customs for a TCO in respect of specified goods. The CEO must then decide if the application meets the core criteria outlined in sections 269C and 269SJ, particularly ensuring that the goods are not substitutable goods produced in Australia and are not among the goods that cannot be subject to a TCO. If these criteria are satisfied, the CEO must make a written order declaring the goods to which the TCO applies (section 269P(3)). In this instance, item 50 of Schedule 4 to the Customs Tariff Act 1995 applies to certain interlining fabrics, resulting in a tariff concession that reduces the duty from 5% to free.
The obligations imposed by the Act on the parties involved are primarily on the CEO of Customs. The CEO must ensure that any TCO application is considered against the criteria in sections 269C and 269SJ. This includes verifying that the goods are not substitutable goods produced in Australia and are not those specified in section 269SJ. The CEO must also publish a notice in the Gazette, inviting any interested parties to submit objections if they believe the TCO should not be made (subsection 269K(1)). The CEO is required to review any submissions received and make a decision based on the merits of the application and any submissions received. In this case, no submissions were received, and the TCO was issued as per the application on 7 March 2008.
Should there be any breach of the conditions set out in the Customs Act 1901 or the associated regulations, there are potential civil and criminal consequences. Although the specific penalties are not detailed in the explanatory statement, breaches of customs laws generally can lead to substantial penalties. Civil penalties might include fines and compensation for any losses incurred due to the breach. Criminal penalties can include imprisonment, particularly if the breach is considered serious or involves fraudulent activity. The maximum penalties would depend on the specific nature and severity of the breach, as outlined in the relevant sections of the Customs Act 1901 and the Customs Regulations 1999.