EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0721788
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 0721788 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. 0721788 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 Australian Parliament to facilitate the regulation of customs and excise duties. A significant feature of the Act is the provision for Tariff Concession Orders (TCOs) under Part XVA, which allows the Chief Executive Officer of Customs to reduce or eliminate customs duty on specific goods, provided certain criteria are met. This mechanism was introduced to address the need for tariff concessions that can support specific industries or sectors by making imported goods more competitively priced against locally produced alternatives. The policy objective behind this is to foster economic growth and efficiency by ensuring that Australian businesses have access to necessary imported goods at reduced costs, thereby aiding their competitiveness in both domestic and international markets.
Tariff Concession Instrument No. 0721788 was introduced on 7 March 2008, following an application by Freudenberg Pty Ltd for a TCO concerning certain interlining fabrics. The CEO determined that no substitutable goods were produced in Australia, thereby satisfying the core criteria set out in the Customs Act. As a result, the CEO issued the TCO, granting a free rate of duty on these specific goods, which otherwise would have incurred a 5% duty. The TCO was published in the Gazette, inviting any objections, but none were received. The order came into effect on 18 December 2007, the date the application was lodged, and it does not impose any liabilities on persons other than the Commonwealth, while potentially benefiting importers by allowing them to seek duty refunds for imports made since the effective date.
Scope and Application
The Tariff Concession Instrument No. 0721788 made under the Customs Act 1901 applies to the specific interlining fabrics for which Freudenberg Pty Ltd submitted an application on 18 December 2007. The instrument is pertinent to the industry involved in the production and importation of these fabrics and provides a concessionary tariff rate for these goods, as determined by the Chief Executive Officer of Customs. The application of the Instrument is national in scope, adhering to the federal jurisdiction of the Customs Act 1901. It excludes any goods specified in section 269SJ of the Act, which cannot be subject to a Tariff Concession Order, and is effective from the date the application was lodged, 18 December 2007. The Instrument does not disadvantage any person or impose liabilities in respect of actions taken prior to its registration, thus ensuring that only future transactions are affected by the reduced duty rate.
Key Provisions
The Customs Act 1901, specifically within Part XVA, provides the framework for Tariff Concession Orders (TCOs), as outlined in sections 269C, 269B, 269D, 269E, and 269F. A TCO can be applied for by any person seeking a lower rate of customs duty on certain goods. The CEO of Customs must then determine if the application meets the core criteria, which include verifying that no substitutable goods are produced in Australia at the time the application is lodged. If the CEO is satisfied that the application meets these criteria, a written TCO is issued, effectively applying a reduced customs duty rate to the specified goods.
Under this Act, the CEO has several obligations when processing a TCO application. Firstly, the CEO must ensure that the application is not for goods specified in section 269SJ of the Act, which are ineligible for a TCO. If the application passes this initial check, the CEO must then confirm that no substitutable goods are produced in Australia at the time of application. If the core criteria are satisfied, the CEO must issue a written TCO, as required by section 269P(3). Additionally, as per subsection 269K(1), the CEO must publish a notice in the Gazette inviting submissions from any interested parties. In this instance, the CEO did not receive any submissions in response to the notice.
Failure to comply with the provisions of the Customs Act 1901 may result in various civil or criminal consequences. However, the explanatory statement does not explicitly mention any specific offences, penalties, or consequences related to the issuance or breach of a TCO. It is important to note that the Act provides a framework for the process and does not detail penalties for non-compliance with the TCO provisions within the provided text. Importers may benefit from the TCO by applying for a refund of duty on goods imported since the date the TCO is taken to have come into force, under paragraph 126(1)(r) of the Regulations, without any imposed liabilities on any person.