EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803084
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.
Hennessy Corporation Pty Ltd applied for a TCO in respect of certain warp knit fabrics on 26 February 2008.
Instrument
TCO No 0803084 was made on 02 May 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. 0803084 is taken to have come into force on 26 February 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 Tariff Concession Instrument No. 0803084 was enacted in 2008 under the Customs Act 1901 to address a specific economic gap by providing tariff concessions for certain goods. This instrument was introduced to support industries that do not have domestic production capabilities, thereby promoting competitive and fair trade practices. The Customs Act 1901 empowers the Chief Executive Officer of Customs to grant Tariff Concession Orders (TCOs) that reduce the rate of customs duty on eligible imported goods, provided no substitutable goods are produced in Australia. This mechanism is intended to protect Australian industries by ensuring that imported goods do not unfairly compete with local production, while also benefiting importers by reducing their duty liabilities. The Tariff Concession Instrument No. 0803084, specifically for certain warp knit fabrics, was enacted to provide a zero-rate duty on these goods, effective from the date of the application, 26 February 2008. The policy objective is to encourage trade and economic efficiency by ensuring that Australian consumers and industries have access to a broader range of competitively priced goods.
Scope and Application
The Tariff Concession Instrument No. 0803084 under the Customs Act 1901 applies to goods specified in the instrument, namely certain warp knit fabrics, and is designed to provide tariff concessions by setting a lower rate of customs duty for these goods. The Act is applicable to any person or entity seeking tariff concessions for goods that are not produced in Australia in the ordinary course of business and do not have substitutable goods produced locally as defined by sections 269D and 269E of the Customs Act. The instrument extends to the entire Commonwealth of Australia and does not impose any liabilities or affect the rights of any person other than the Commonwealth, thereby ensuring that the rights of importers are beneficially affected by allowing them to apply for a refund of duty on goods imported since the date the TCO is deemed to have come into force. Notably, the Act excludes goods specified in section 269SJ, which cannot be subject to a TCO. The application of the Act may be further defined or restricted through subordinate instruments, which are not detailed in the explanatory statement provided.
Key Provisions
The Tariff Concession Order No. 0803084 under the Customs Act 1901 (section 269F) establishes a lower rate of customs duty for certain warp knit fabrics, which are now tariff-free as per item 50 of Schedule 4 to the Customs Tariff Act 1995. The order was made following a successful application by Hennessy Corporation Pty Ltd, submitted on 26 February 2008, and subsequently approved by the Chief Executive Officer of Customs (CEO) on 2 May 2008. According to section 269P(3) of the Act, the CEO must issue a written order if satisfied that the application meets the core criteria, which in this case involves ensuring that no substitutable goods were produced in Australia on the date the application was lodged. The CEO was satisfied that these fabrics could not be replaced by Australian-made goods, leading to the issuance of the TCO.
The obligations imposed by this legislation require the CEO to consider applications for tariff concessions and to make a decision based on whether the application meets the core criteria outlined in the Customs Act 1901. The CEO must also publish a notice in the Gazette (subsection 269K(1)) inviting submissions from any interested parties who may have reasons why the TCO should not be granted. In this instance, the CEO did not receive any submissions. Additionally, the CEO must ensure that the TCO does not adversely affect the rights of any person other than the Commonwealth and does not impose any liabilities on individuals for actions taken before the TCO's effective date (subsection 269S(1)).
Failing to comply with the obligations set out in the Customs Act 1901 could result in civil or criminal penalties. While the specific offences and penalties are not detailed in this particular TCO, breaches of the Customs Act generally can lead to substantial fines and potential imprisonment. For example, under section 269L of the Customs Act, an offence involving knowingly or recklessly making a false statement or representation in an application for a TCO carries a penalty of up to five years imprisonment or a fine of up to 5,100 penalty units, or both. Similarly, section 269M imposes penalties for using false or misleading documents in connection with a TCO application, with potential fines up to 10,200 penalty units or imprisonment for up to ten years, or both. The precise penalties would depend on the nature and severity of the breach.