EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0811421
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 fabric on 05 June 2008.
Instrument
TCO No 0811421 was made on 15 August 2008. It declares that those certain warp knit fabric 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. 0811421 is taken to have come into force on 05 June 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. 0811421 was enacted in 2008 to address the specific needs of businesses seeking to import certain goods under a reduced tariff rate. This instrument was developed under the authority of the Customs Act 1901, specifically addressing the application process for Tariff Concession Orders (TCOs) as outlined in Part XVA of the Act. The primary objective of this legislation is to facilitate the import of goods that do not have substitutable Australian-produced alternatives, thereby promoting trade and potentially lowering costs for businesses reliant on these imports. The instrument was introduced following an application by Hennessy Corporation Pty Ltd for tariff concessions on certain warp knit fabric, and it was designed to ensure that such applications are considered fairly and transparently, with due regard to the potential impact on both businesses and the broader economy. The process includes a mandatory public consultation period, although in this instance, no submissions were received in response to the notice published in the Gazette.
Scope and Application
The Tariff Concession Instrument No. 0811421, made under Part XVA of the Customs Act 1901, applies to the goods specified in the instrument, in this case certain warp knit fabrics, for the purpose of reducing the rate of customs duty applicable to them. The Act enables the Chief Executive Officer of Customs to make Tariff Concession Orders (TCOs) on the application of a person, provided the application meets the core criteria and the goods do not fall under the exclusions set out in section 269SJ. The instrument was made on 15 August 2008, and it came into force on 05 June 2008, the date on which the application was lodged. The geographic scope of this Act is national, as it pertains to the Customs Act 1901, which is a Commonwealth Act. The application of the TCO does not affect any rights or impose any liabilities on persons other than the Commonwealth, as it only benefits the importers by reducing their duty on the specified goods.
Key Provisions
The main provisions of Tariff Concession Instrument No. 0811421, which operates under the Customs Act 1901 (section 269F), focus on the process and criteria for making Tariff Concession Orders (TCOs). A TCO is a directive issued by the Chief Executive Officer (CEO) of Customs, which allows for a lower rate of customs duty on specified goods. For instance, section 269C of the Act stipulates that a TCO application meets the core criteria if, on the day the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. This is further defined by sections 269D, 269E, and 269F of the Act, which provide specific meanings to terms such as "goods produced in Australia," "ordinary course of business," and "substitutable goods." If the CEO is satisfied that the application meets these criteria, they must make a written order (section 269P(3)), as was done for certain warp knit fabric (item 50 of Schedule 4 to the Tariff).
The Act imposes several obligations and requirements on the parties involved. Firstly, applicants such as Hennessy Corporation Pty Ltd must ensure their applications are made in accordance with the provisions of section 269F. The CEO must also adhere to the process outlined in the Act, including the assessment of the application against the core criteria and the publication of a notice in the Gazette inviting submissions from any interested parties (section 269K(1)). The CEO must make a decision on the application based on whether it meets the specified criteria and whether any submissions have been received. If no submissions are received, the CEO proceeds to issue the TCO, as seen in this case where the CEO issued TCO No. 0811421 on 15 August 2008.
Failure to comply with the requirements of the Customs Act 1901 can lead to various civil and criminal consequences. Section 269SJ of the Act specifies that certain goods cannot be the subject of a TCO, and any attempt to apply for a TCO on such goods could result in penalties. Additionally, if the CEO issues a TCO on goods that do not meet the criteria, this could lead to legal challenges and potential penalties for the party benefiting from the TCO. While the explanatory statement does not specify maximum penalties, breaches of the Customs Act generally can result in fines and, in severe cases, imprisonment. The Act's provisions ensure that the rights of importers are protected, such as the ability to apply for a refund of duty on goods imported since the TCO came into force (Regulations, paragraph 126(1)(r)), while also ensuring that no one is disadvantaged by the TCO.