EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0800851
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.
Co Operative Bulk Handling Limited applied for a TCO in respect of certain polyester fabric on 15 January 2008.
Instrument
TCO No 0800851 was made on 28 March 2008. It declares that those certain 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 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. 0800851 is taken to have come into force on 15 January 2008.
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 Commonwealth Parliament, provides for a scheme under which Tariff Concession Orders (TCOs) may be made to apply lower rates of customs duty to certain goods. The problem or gap addressed by this legislation is the need for a structured process to grant tariff concessions for specific goods, ensuring that these concessions are only applied when appropriate and do not disadvantage Australian producers. The policy objective, as stated, is to facilitate trade by allowing for tariff reductions under controlled circumstances, thereby benefiting importers while safeguarding domestic production. On 28 March 2008, Tariff Concession Instrument No. 0800851 was introduced, applying to certain polyester fabrics and setting their duty rate to free, as no substitutable goods were produced in Australia at the time of the application. The instrument came into effect on 15 January 2008, and no objections were received during the consultation period. This concession allows importers of the specified goods to apply for a refund of duty from the date the TCO is deemed to have come into force.
Scope and Application
The Customs Act 1901, through its Tariff Concession Orders (TCO) provisions, applies to the application process for tariff concessions on certain goods, administered by the Chief Executive Officer of Customs (CEO). The scope of this legislation encompasses any person or entity that wishes to apply for a tariff concession on goods not produced in Australia, thereby allowing for a potentially lower rate of customs duty on these goods. The instrument extends to the national level, as it is governed under the Commonwealth jurisdiction, and it effectively applies to all industries and goods not specified in section 269SJ of the Act, which details goods ineligible for tariff concessions. Notably, the legislation excludes goods specified in section 269SJ from its purview. The CEO is mandated to assess applications based on the criteria outlined in sections 269C, 269B, and 269D of the Act, ensuring that no substitutable goods are produced in Australia. The commencement of a TCO is effective from the date of the application, and the process includes a public consultation phase where interested parties can submit objections. The TCO in question, Instrument TCO No 0800851, pertains to certain polyester fabrics and was made effective from 15 January 2008.
Key Provisions
The primary operative sections of the Customs Act 1901, as applied in Tariff Concession Instrument No. 0800851, include sections 269C, 269F, and 269P. Section 269F allows a person to apply to the Chief Executive Officer (CEO) of Customs for a Tariff Concession Order (TCO) in respect of certain goods. Section 269C stipulates that the CEO must make a TCO if satisfied that the application meets the core criteria, which include that no substitutable goods are produced in Australia at the time of application. Section 269P mandates that if the CEO is satisfied with the application, they must issue a written TCO.
The Act imposes several obligations and requirements on parties and entities governed by it. The CEO is required to determine whether an application for a TCO meets the core criteria, specifically checking if no substitutable goods are being produced in Australia. Additionally, the CEO must publish a notice in the Gazette inviting any interested party to submit reasons why the TCO should not be made if the application is deemed valid. Importers, once the TCO is registered, have the right to apply for a refund of duty on goods imported since the TCO's effective date under paragraph 126(1)(r) of the Regulations.
Any breach of the provisions within the Customs Act 1901, or failure to comply with the requirements set out in the TCO, may result in various civil or criminal consequences. While the specific penalties are not detailed in the Explanatory Statement, breaches of customs regulations typically attract fines and potential imprisonment. The exact penalties would depend on the severity of the breach and any relevant case law or additional regulations. The Act ensures that the rights of individuals, other than the Commonwealth, are protected and that the TCO does not disadvantage them or impose liabilities for actions taken prior to the TCO's registration.