EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0803411
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.
Pacific Brands Clothing Pty Ltd applied for a TCO in respect of certain bonding machines on 29 February 2008.
Instrument
TCO No 0803411 was made on 16 May 2008. It declares that those certain bonding machines 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. 0803411 is taken to have come into force on 29 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. 0803411 was enacted in 2008 under the Customs Act 1901 to address the specific needs of businesses seeking tariff concessions on imported goods. This instrument was introduced to facilitate the process through which companies can apply for lower customs duty rates on certain goods, provided that no substitutable goods are produced in Australia. The Tariff Concession Orders (TCOs) scheme, outlined in Part XVA of the Customs Act, allows the Chief Executive Officer of Customs to grant tariff concessions if the application meets the core criteria specified in the Act, particularly ensuring that no equivalent goods are manufactured domestically. Pacific Brands Clothing Pty Ltd applied for and received a TCO for certain bonding machines, resulting in a reduction of the duty rate from 5% to free, effective from 29 February 2008. The objective of this instrument is to support businesses by reducing their import costs, thereby enhancing their competitiveness and potentially benefiting the broader market through lower prices and increased availability of goods.
Scope and Application
The Tariff Concession Instrument No. 0803411, made under the Customs Act 1901, applies to goods for which a Tariff Concession Order (TCO) has been granted by the Chief Executive Officer of Customs (CEO). Specifically, it applies to certain bonding machines that Pacific Brands Clothing Pty Ltd applied for under the scheme established in Part XVA of the Act. The Act allows for the application of a lower rate of customs duty on goods that are subject to a TCO, provided the application meets the core criteria outlined in section 269C. This means that if the CEO is satisfied that no substitutable goods were produced in Australia on the day the application was lodged, a TCO can be made. The geographic reach of this legislation is national, applying across Australia under the Commonwealth jurisdiction. However, the Act excludes certain goods from being subject to a TCO, as specified in section 269SJ. The TCO does not extend to disadvantaging any person or imposing liabilities on them in respect of actions taken before the TCO was registered. Instead, it beneficially affects the rights of importers who can apply for a refund of duty on goods imported since the TCO's effective date. The CEO did not receive any submissions opposing the TCO after publishing a notice in the Gazette, and the TCO came into force on the day the application was lodged, 29 February 2008.
Key Provisions
The primary operative sections of the Customs Act 1901, specifically concerning Tariff Concession Orders (TCOs), include sections 269C (core criteria for TCOs), 269D (meaning of goods produced in Australia), 269E (ordinary course of business), 269F (application for TCO), and 269P (process for making a TCO). Section 269C stipulates that a TCO application will meet the core criteria if no substitutable goods were produced in Australia on the day the application was lodged. This means that if Australian-produced goods do not exist that can serve the same purpose as the goods in question, the application is likely to be approved. The CEO of Customs is tasked with deciding whether an application meets these criteria (section 269F). Once the CEO determines that the application satisfies the core criteria, they must issue a written TCO, specifying that the goods in question are subject to a particular item in Schedule 4 of the Customs Tariff Act 1995 (section 269P(3)).
The obligations imposed by the Act on the parties involved are quite clear. The CEO of Customs must ensure that the application does not pertain to goods specified in section 269SJ, which outlines those goods that cannot be subject to a TCO. The CEO must also verify that the application meets the core criteria laid out in section 269C. Additionally, upon receiving a valid application, the CEO must 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)). In the case of TCO No. 0803411, the CEO did not receive any submissions, facilitating the smooth progression of the order.
In terms of potential breaches and their consequences, the Customs Act 1901 does not explicitly outline specific offences or penalties related to the misuse or improper application of TCOs. However, the Act generally provides for enforcement actions against any misuse of the customs regime. For example, under section 132, any person who contravenes the Act or Regulations may be liable for a penalty. The maximum penalty can vary, but for a serious breach, it can include substantial fines or imprisonment, depending on the severity of the offence. It is important to note that the TCO itself does not impose any liabilities on any person, nor does it affect the rights of any person as at the date of registration, ensuring that existing rights and obligations remain intact.
In conclusion, TCO No. 0803411, as outlined in the Explanatory Statement, demonstrates the process and criteria for applying for tariff concessions under the Customs Act 1901. The CEO's role is pivotal in assessing applications against the core criteria and ensuring compliance with the Act. While the specific consequences of non-compliance with the Act are not detailed in this context, the overarching legal framework provides for significant penalties for breaches, ensuring the integrity and effectiveness of the customs regime.